Back in 2009, San Francisco-based mobile payments and carrier billing company Boku was born out of the merger of two other startups, Paymo and Mobillcash. Today, Boku is making its first acquisition in another consolidation move: it has acquired Qubecell, India’s largest carrier billing company.
The terms of the deal were not disclosed. Boku to date has raised some $73 million in VC funding from the likes of Andreessen Horowitz, Telefonica, and more.
India is a market full of potential — with over 800 million subscribers, it is still one of the fastest-growing mobile markets in the world. But it is also very fragmented, with a number of smaller carriers, and a user base further behind than countries like the U.S. and China when it comes to smartphone adoption. (In essence, that also means many more feature phone platforms with which to content alongside smartphone operating systems.)
In that regard, tackling the market through an acquisition of a local player makes sense. Boku says that Qubecell already has deals with four of the largest mobile networks in the country, which gives it the ability to reach some 75% of the country’s mobile phone users, or around 550 million people. (That does not mean, of course, that 550 million people will be using Boku’s carrier billing services, but that Boku will have that potential reach.) The deal will make Boku the country’s largest carrier billing provider.
Jon Prideaux, Boku’s chief business officer, tells me that the aim will be not just to use Qubecell’s skills to build out its business in India, but also to leverage its engineering talent for future Boku products. One area where that will come in handy is in the company’s larger global ambitions. use it as a foothold to expand into other markets in Asia as well as the middle east. This will be run in part by Ranjan Reddy, who is currently the CEO of Qubecell. “We are looking at India now as the hub for our efforts in this part of the world,” he said in an interview. “Together with Boku, we can now look at the Middle East and other countries in the subcontinent.”
Although initially this will be about enabling services to buy digital content on mobile devices (app purchases, ringtones, music and so on), plans do not stop there. India is a ripe market for carrier billing services in part because, like other emerging markets, it has very low credit card penetration — only 11 million today, according to Reddy. That means there is an opportunity to create ways of helping users pay for other digital goods, using their existing carrier billing relationships as a card payment replacement.
“We want to take carrier billing to other areas beyond mobile,” Reddy told me. Currently he says the limit for a transaction is 500 rupees ($8), and is restricted to digital goods. “But the plan is to extend this beyond digital goods in India specifically,” he said. “There are avenues that are being explored and regulatory issues that come into play, but it is something we want to do.” Indeed, Prideaux points out that a large part of Boku transactions today are initiated on PCs, laying the groundwork for how Boku could fit in with, say, e-commerce sites in the future.