Mdundo Faces Challenges in Subscription Revenue
The music streaming platform Mdundo, focused on Africa, has initiated a strategic review due to ongoing “billing issues” with telecommunications partners that facilitate paid subscriptions.
This strategic review “could lead to a change in ownership, merger, strategic investment, or other consolidation,” Mdundo stated during an announcement on Thursday (April 3), adding that “there is no guarantee that a strategic review will lead to this outcome.”
The announcement came a day after the company issued a downward revision of its income guidance for the current financial year, which concludes on June 30.
Mdundo now anticipates income From 11 to 12 million Danish Kroner (From 1.6 to 1.8 million at the current exchange rate), a decrease from its previous guidance of From 12 to 15 million DKK.
(Mdundo is listed on NASDAQ First North Exchange in Copenhagen and reports its income in Danish Kroner.)
The company attributes the negative revision to challenges in receiving payments from its two largest telecommunications partners, which account for 75% of its subscription revenue for calendar year 2024.
Partnerships to Enhance Payment Solutions
Due to the low penetration of payment cards in many African markets, Mdundo has formed partnerships with various telecom providers in key countries such as Nigeria, South Africa, and Tanzania, enabling subscribers to pay their phone bills more conveniently.
“Our partners will continue to address these issues, but timelines remain uncertain. A resolution is expected to positively influence subscription revenue growth,” Mdundo’s statement indicated on Wednesday (April 2).
The company expressed that its revised lower guidance suggests these issues may not be resolved before the end of the financial year, though it noted that its EBITDA guidance and user numbers remain unchanged.
Mdundo expects to incur a negative EBITDA of DKK -4 to -5 million (-0.6 to -0.75 million USD) during the current financial year, which would represent an improvement compared to last year’s reported DKK -6.4 million EBITDA.
The company continues to strive for its target of 40 million monthly users by the end of the current financial year, up from 35 million reported for the 2023/2024 financial year.
In the first half of the current year, which concluded on December 31, 2024, Mdundo reported a 45% year-on-year increase in subscription revenue to DKK 4.5 million (0.65 million USD at the average exchange rate for 2024).
“Since the IPO, Mdundo has strengthened its robust and scalable platform, significantly expanded, and accessed a growing subscriber base through partnerships.”
Jesper Vesten Drescher, Mdundo
The company has seen its user base grow sevenfold since its IPO in 2020.
“Given our progress since the IPO, it is prudent to evaluate the next steps in Mdundo’s strategic development, which is why we have launched a strategic overview of options for further leveraging our existing platform,” Mdundo Chairman Jesper Vesten Drescher stated.
The company has not provided a timeline for the strategic review.
