Bango boosted by Apple direct carrier billing speculation

Shares in Bango have risen after Apple's German iTunes site began to adopt direct carrier billing, a means of charging digital content to mobile customers via additions to their phone bill.

Apple's initial adoption of direct carrier billing, also known as mobile network operator (MNO) billing, is only for customers on the O2/Telefonica mobile network, who will now be offered another way to pay for purchases on iTunes outside of their credit or debit cards.

“Telefónica Germany is working with Apple related to carrier billing,” a spokesperson told TechCrunch. “Payment via the O2 phone bill is now available for Apple Music, iTunes, App Store and iBooks Store Purchases. The service is gradually being rolled out and will be available for all O2 customers (prepaid and postpaid) in Germany by the beginning of November 2015.”

Although Bango has never admitted to be working with Apple, a point vigorously made by its spokespeople, investors seem to have speculated that Bango's technology is now being used by Apple, an assumption likely based on the fact that it has far been taken up by all the other major stores to have adopted direct carrier billing.

Bango's technology, which essentially provides a connection between app stores and mobile network to facilitate digital purchases, has been adopted by clients including Google's Play store, Amazon, Blackberry and Microsoft, together with practically all major mobile networks worldwide.

"Bango is delighted to see the use of direct carrier billing is being expanded in this way, following the prior support for iTunes voucher sales using direct carrier billing in some countries," the AIM company said.

"Other app stores providers, including Google, Amazon, Blackberry and Microsoft, have found carrier billing to be a successful payment method and have gradually expanded its availability to more customers. We believe that Apple will see positive results through carrier billing and follow a similar path."

Bango's half-year results in September showed end user spend (EUS) increased 72% to £18.45m and gross profit on EUS increased 36% year-on-year to £0.38m, partly on the back of seven new Google activations including its direct carrier debut into South America and Africa.

House broker Cenkos forecasts an increase in end-user-spending during 2015 of 78% to £44.8m and 693% to £199.7m by 2017. Based on a strategic switch from asking clients for up-front activation fees to a monthly payment of fees, Bango is forecast to break even at the pre-tax level in 2017.

Shares in Bango were up 11.4% to 112.5p by 1230 BST on Thursday, up 34% over the week.