The Big ME Interview: Shane Leahy, Oxygen8 | Mobile Payments | Mobile Entertainment

The Big ME Interview: Shane Leahy, Oxygen8

shane leahy oxygen 8
Tim Green

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Payments / October 30th 2013 at 3:27PM

Oxygen8 rose of the ashes of a premium rate scandal to become a profitable £90m company. Leahy explains how...

In 2007, the premium rate mobile business in the UK endured its darkest hour. The industry had strayed many times into territory marked 'dodgy' and here was a perfect storm of shady practice, press outrage and public scorn.

And unfortunately for Oxygen8, it was right at the centre of it, getting absolutely pissed on.

The outcry centred on competitions run by morning TV station GMTV. It was charging viewers to enter either by PSMS or premium rate voice and was using Opera Telecom (Oxygen 8's previous brand) to run the contests.

The problem was that GMTV requested the winner's names half an hour before the competition closing time. That meant people were entering with no chance of winning.

Opera should have resisted, but complied – no doubt concerned at the prospect of losing a lucrative contract.

When the truth emerged, Opera was slaughtered. The scandal even saw the firm's founder 'shamed' on the front page of the UK's leading tabloid, The Sun.

GMTV was quick to denounce its partner, which was pretty low considering its part in the furore. But when the press discovered the full story, it too was rightly castigated.

So, dark days for Opera.

And yet also, the best thing that could have happened.

Why? Because the management knew that the premium rate days were numbered, and that Opera needed to evolve into a new kind of business.

The GMTV thing merely accelerated that change.

In 2008, Opera became Oxygen8 to focus on a combination of next generation mobile payments products and mobile communications ideas.

Today, it's profitable, debt-free and active in 20 countries.

I spoke to its CEO Shane Leahy…

Looking back on the GMTV affair, it was clearly pretty horrible. But do you agree it was for the best

Well, it shouldn't have happened. It had huge effect on us financially. We lost millions. But I am proud of the way we dealt with it. We made a substantial settlement to GMTV and the viewers affected. We handed our accounts over to forensic accountants and took out national ads to repair the damage.

It all meant we had to rationalise quickly and, yes, that helped us. I think we had our house in order before the business really started to change.

So how to you summarise your business now?

We're a mobile solutions company. We give corporates all kinds of tools to help them use mobile as a communications channel. And then we do payments too.

How does the business split in terms of revenue?

Well, it's better to look at profits. The corporate side has gone from 30 per cent to 43 per cent in a year, and we expect that side of the business to keep growing.

What sort of comms solutions do you provide to these corporates?

We're doing a lot with location, for example. We worked with O2 on a toll payment service in Ireland. Users sign up and get a GPS-enabled toll tag that's linked to their mobile number. Then when they drive through the toll, the charge is taken from their bill. It's the first time anything like this has been tried.

We also do alerts to people at airports to tell them about roaming charges – that kind of thing.

How have you evolved your payments business?

Well, it's gone beyond purely operator billing, so we now integrate with banking and card systems. The interesting thing is that we can use these back-end connections to create useful messaging products.

We can work with card companies to link a mobile number with a card account, so people can pay by text.

And we've worked on similar ideas with gambling firms to let users who have credit card accounts pay securely using text but from their cards.

And you're very active in Africa with the new kinds of mobile wallets…

Yes. That's been really interesting for us. We're positioning ourselves as a kind of PSP that can aggregate the many different mobile payment systems so that merchants have one channel to go through.

So, to give an example, we've recently started working with Kenya Orient Insurance. Mobile money users in Kenya can set up accounts and make regular payments through their phones and we manage it all though our systems.

It's a really fascinating space, with loads of potential to move into utility bills, international transfers and so on.

Is that market accelerating outside of Kenya?

Less so. It's starting to move in Uganda and Tansania, where we have offices, and in South Africa to a degree – although the banks are resisting it there.

What do you think is needed for Western mobile users to embrace mobile wallets?

I personally think the possibilities are endless for mobile money. I think the operators have a real opportunity to play a part, but I suspect they won't really do anything until Apple, Google or Facebook make a serious move.