Mahindra War Room 2017 IT - Comviva Business Caselet

MAHINDRA INFORMATION TECHNOLOGY SECTOR

COMVIVA BUSINESS CASELET - TERRAPAY GROWTH STRATEGY

Mahindra Group forayed into the budding information technology sector in 1986, with
the formation of Mahindra British Telecom, as a joint venture with British Telecom
created to provide telecom technology outsourcing solutions. The company was a niche
provider of IT solutions primarily to the telecom sector, with the growth driven by the
vagaries of the telecom vertical. Independent of this operation, Mahindra acquired a
silicon valley based start-up called Bristlecone, which specialized in offering supply
chain consulting and implementation services on the SAP platform for the US market.
Bristlecone continued to offer Supply Chain consulting services as an independent
company operating in the US after the acquisition. For Mahindra, the defining moment
in its IT journey came in the form of a corporate black swan event - the Satyam Scandal
of 2008-9. In a deal fraught with risk and uncertainty, Tech Mahindra acquired Satyam -
a company twice its size and higher in profile - in a competitive bidding process, and
subsequently merged the operations into itself, creating one of the largest merger deals
in India’s Tech Industry. This acquisition created a positive asymmetry, enabling Tech
Mahindra to gain exponentially from the large customer base, superior processes and
diversified solutions across business verticals. Tech Mahindra and Mahindra Satyam
became one entity, to create India’s 5th largest software services company. Between
2010 and 2012, British Telecom exited the joint venture. In 2012, Tech Mahindra
acquired Comviva, a bangalore based company offering value added services for
mobile operators. This was another positive asymmetry move which the company took
to ensure that its is able to leverage the mobile based digital revolution.

Today, Mahindra Group’s Information Technology Sector clocks revenues of over USD.
4.5 Billion annually, from three distinct businesses - Tech Mahindra, Bristlecone, and
Comviva - offering Information Technology services in the areas of Network. Mobile,
Analytics, Cloud, Security, Social and Sensors, across 50 countries world-wide, with a
rich clientele of Fortune 500 corporations.

Mahindra Comviva is a global leader in providing mobility solutions with an extensive

portfolio spanning mobile finance, content, infotainment, messaging and mobile data
solutions. Mahindra Comviva enables service providers to enhance customer
experience, rationalise costs and accelerate revenue growth. Comviva mobility
solutions are deployed by over 130 mobile service providers and financial institutions in
over 90 countries, impacting the lives of over a billion people across the world. In India

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Mahindra Comviva’s customers include all the top 3 telecom operators – Airtel,
Vodafone and Idea among many others. Comviva has significant operations in Nigeria,
with its office based in Lagos. Comviva’s successful hyperlocal Zerch App was the
subject of MWR Season 8 Live Challenge, and the successful Zoto app from Nigeria
was the subject of MWR Season 9 Live Challenge. Now it is the turn of TerraPay.

LIVE BUSINESS CHALLENGE: TERRAPAY GROWTH STRATEGY

Mahindra Comviva has evolved into a leading player in the providing of B2B Mobile
Financial Services across the globe. In the process, Mahindra Comviva has built strong
relationships with Mobile Money Operators across the globe, as well as the required
people and technological expertise in building and operating systems for large-volume
but low-value payments. Ever since Steve Jobs introduced the legendary iPhone in
2007, the world of Mobile Internet has seen disruption like never before. With faster
networks and more efficient phones coming in every other year, one of the most
impacted business is online payments. Today, a customer who wishes to transact
through mobile has the option of using Mobile Wallets (such as PayTM, Airtel Money),
Payment Apps (such as BHIM, Samsung Pay) as well as the Apps created by the Banks
themselves (SBI Buddy, HDFC Bank App), other than paying through the card online.
Mobile payments gain an edge over computer based payments as they are often
connected directly to fast mobile networks, are more ubiquitous than computers, and
are associated with a unique mobile number often designated to a specific customer. A
key feature of this ecosystem is the reality that one Mobile Wallet is not differentiated
from the other when it comes to benefits. There is a "hedonistic treadmill" effect
because to a customer there isn't much difference in the choice that he needs to make.

One of the major drawbacks of the Mobile based payment instruments, however, is that
they are islands that do not interoperate with each other. For example, it is not possible
to transfer money from Wallet A of Operator 1, to Wallet B of Operator 2. Also, most
mobile based payment instruments do not offer international payment services - person
to person, or otherwise. Comviva has created TerraPay to bridge this gap, by making
international payments interoperable by using a consumer’s mobile number (MSISDN)
as their unique identity. Just like how PayPal made payments easy and possible, using
just an email address, TerraPay enables cross-border payments in real-time, using just
a mobile number. In the concept of Antifragility, this is called “Transferability” - using the
knowledge of one successful system, and applying it to another system to make it more
efficient. Mahindra Comviva has huge "transferability" opportunities when it comes to

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using the learnings gained in the B2B segment and applying them to the B2C segment.
TerraPay is a B2B service that interconnects with other ‘Partners’ in the ecosystem,
such as Payment Service Providers, Mobile Money Operators Money Transfer
Operators and Banks - to create a one network, for secure and seamless transnational
movement of funds. The network has the capability to facilitate a broad transaction set
including interpersonal transfers, e-payments and government disbursements. Being
Platform agnostic, TerraPay supports standard open APIs for integration with any
payment platform. Through a single connection, partners gain access to a global
payment network. And as a fully regulated financial intermediary services network,
TerraPay assumes end-to-end responsibility for regulatory compliance, foreign
exchange management, funds settlement and reporting. The following diagram shows
how Person A can send USD. 100 in real time, from a money transfer operator “X” in
UAE to Person B’s Mobile Wallet “Y” in Kenya using Person B’s mobile number, through
TerraPay’s network in which both X and Y are TerraPay partners:

Currently, TerraPay is operational for P2P cross-border payments in sub-saharan Africa,

South Asia, Middle East, North Africa and Europe. TerraPay is licensed, through its
subsidiaries, in the European Economic Area, Mauritius, Kenya, Tanzania, South Africa,
Botswana, DRC and Congo. It is operational in other jurisdictions through licensed
partners. TerraPay’s key strength is in “creating optionality” by offering an end-to-end
payment solution through services such as compliance, eKYC, regulatory cover, foreign
exchange, reporting, payments, system integration and white-labelled apps for partners.

Given this backdrop, devise a strategy and a business plan for TerraPay to
become a global “one network” for mobile focused international payments. The
strategy should include key Target Markets to be addressed over the next 3 years,
the regulatory and other Challenges in the identified markets with approaches to
overcome these challenges, the competitive landscape in these target markets,

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the Key Partners such as Mobile Money Operators, Money Transfer Operators,
Banks, Retailers and other Payment Service Providers with whom TerraPay
should connect, the GoToMarket Strategy, and a sharp definition of TerraPay’s
right to win, the alternate Revenue Models and break-even points subject to
launch timelines in the identified markets, and the associated risks involved.

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