Transsion Holdings, the leading mobile phone brand in Africa, went public on the Shanghai Stock Exchange in September 2019. The company currently has a total market capitalization of RMB 110.8 billion ($16.9 billion). A first-day investor would be sitting on a healthy gain of 146% in the space of just 15 months (see chart).

Transsion Holdings Stock Performance at Shanghai Stock Exchange, Sept 2019 – Nov 2020

Source: Refinitiv

Transsion Holdings defied expectations when it reported revenue of RMB 25 billion ($3.77 billion) and income of RMB 1.95 billion ($295 million) in the first three quarters of 2020. These numbers are 48% and 50% higher than their respective performances in the first three quarters of 2019, an impressive feat despite the supply chain and distribution challenges posed by COVID-19. So far, the company’s unique approach of low pricing, localization and mass marketing, and a three-pronged brand strategy has paid off in Africa, a notoriously fragmented market.

Source: Transsion Holdings Investor Relations

Africa – A Market Overlooked

Global mobile phone giants like Nokia and Samsung have traditionally brought models that were designed for developed world consumers, to big African cities without looking in-depth at the economic realities and customer needs. From early on, Transsion’s business strategy would circumvent the big cities and target lower-tier cities and rural areas. To build the brand, the company would spend heavily on distribution, sales and marketing, and adjust campaigns and go-to-market activities to different regions’ realities. To gain local knowledge, Transsion would even send managers from its headquarters in China to live and work in remote African locations for extended periods of time.

The African technology sector has seen tremendous change in the last decade, driven by infrastructure as well as social factors. Many countries are no longer technology barren lands, as steadfast urbanization and widening mobile network coverage (see below) laid the foundation for rapid smartphone adoption.

Urban population (% of total population)

Source: World Bank

Sub-Saharan Africa Population Covered by a Mobile Broadband Network (3G and Above)

Source: GSMA

Adults Who Use Internet or Own a Smartphone

Source: Pew Research Center

According to a Pew Research Center survey (see above) carried out in six African countries, education and age were far more important factors in determining smartphone ownership and internet usage than other prominent socioeconomic variables like income and gender. Using the internet via a smartphone requires a certain level of literacy (which, at 2 out of 3 adults according to World Bank, isn’t a given across Africa). Doing so regularly requires a reliable electricity supply, which is not always readily available. Consequently, young, educated and urban residents have been the first wave of smartphone adopters. We expect the same enlarged pool of consumers to drive smartphone and internet adoption in the future. The African population in the 20-39 age group is expected to increase to 506 million, or by 30%, in the next decade (Source: UN’s Department of Economic and Social Affairs).

Recent performances

After more than a decade in operation, the bulk of Transsion’s business comes from three established mobile phone brands – TECNO, Itel and Infinix. Collectively, the three brands represent 38% of smartphones and 67% of feature phones shipped in Africa in Q3 2020, topping both Samsung and Huawei, according to the Counterpoint Market Monitor service. More specifically, Transsion dominates the low-price segment – the three brands together account for 45% of shipped devices priced below $100, in Q3 2020.

Source: Counterpoint Report - Transsion Holdings: Ascent of Africa’s Smartphone King

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What are the key success areas of Transsion? How has it applied big data and user insights to produce superior products? What are Transsion’s content strategies for a very different group of African internet users? What has the company done right in terms of distribution, after-sales and marketing, something which has eluded many competitors that have tried to enter the market?

To find answers to these questions, please refer to the full report Transsion Holdings: Ascent of Africa’s Smartphone King.