Buying Bango plc (LON:BGO)

I took some of the proceeds from the EU Supply (LON:EUSP) takeover and bought shares in Bango plc (LON:BGO). Along with Boku Inc (LON:BOKU), Bango enables online merchants to offer direct carrier billing (DCB) as a payment option to their users. This is where you can charge a purchase to your mobile phone account rather than using a credit card. Many people in developing markets do not have credit cards and so DCB means they can access paid internet services for the first time. Bango's customers include Samsung, Google, Amazon, Microsoft and Pandora while Boku boasts the likes of Apple, Facebook, Google, Microsoft and Spotify. Bango's end user spend (EUS) run-rate is about £1 billion and doubling each year, for Boku it's US$3.6 billion also growing 100% annually. Both companies are tipping into profitability and I would hold both stocks if my broker would allow it.

I think it would be hard for new players to enter this market as Bango and Boku have spent the last decade adding hundreds of mobile carriers to their networks and have already signed up the technology giants who account for most end user spend. Customer concentration is a risk, but the potential is obvious and the current share price of each business implies little chance of success.

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