Transsion Bets on Africa’s ‘Electric Donkeys’ as Phone Growth Stalls

Transsion Holdings, the Shenzhen-listed budget smartphone maker that dominates Africa, is racing to transform itself into a broader tech group as handset growth slows and competition intensifies. The company is seeking a main-board listing in Hong Kong to fund an expansion from phones into PCs, home appliances and electric two- and three-wheelers in African and other emerging markets.

The pivot comes as Transsion’s core mobile business posts its sharpest downturn since its 2019 Shanghai debut. Revenue and profit fell in the first three quarters of 2025, while gross margins dropped to the lowest level since listing, under pressure from rising component costs and a price war at the low end of the market.

Africa, long Transsion’s profit engine and still its most important region, is no longer the unchallenged stronghold it once was. Chinese peers including Xiaomi and Honor have moved in, eroding the company’s lead particularly in low-end smartphones where customers are highly price-sensitive and cost inflation is hardest to pass on.

Transsion’s answer is to build an ecosystem around its phones, extending into connected devices and “new energy” mobility. It has launched branded light electric vehicles in African markets and plans to deploy supporting charging and battery-swapping infrastructure, a capital-intensive bet on what it sees as a long-term structural shift in transport.

Earnings Hit a Wall

Transsion filed its H-share listing application with the Hong Kong Stock Exchange on 2 December, a day before disclosing the plan in Shanghai, underscoring the urgency of securing fresh capital. The listing push coincides with what the company describes as its most difficult operating period since going public.

In the first three quarters of 2025, Transsion generated revenue of RMB 49.54 billion (US$6.8 billion) and net profit attributable to shareholders of RMB 2.15 billion, down 3.33% and 44.97% year on year respectively. Starting from the second quarter of last year, net profit has now declined for six consecutive quarters.

Profitability has deteriorated more sharply than sales. The company’s gross margin fell to 19.47% in the third quarter of 2025, the lowest since listing, as higher costs and intensified competition squeezed its main handset business.

Core Phone Franchise Under Strain

Handsets still account for more than 90% of Transsion’s revenue. After steady growth from 2022 to 2024—when phone sales rose from RMB 42.52 billion to RMB 63.20 billion—the business reversed course this year. First-half 2025 handset revenue dropped 18.41% year on year to RMB 26.09 billion.

Africa and emerging Asia-Pacific remain Transsion’s two largest smartphone markets, but both are now shrinking. In the first half of 2025, Africa revenue slid 4.45% to RMB 9.65 billion, while emerging Asia-Pacific revenue fell 19.56% to RMB 10.41 billion. Sales in the Middle East, Latin America and Central and Eastern Europe also declined to varying degrees.

Transsion, which entered Africa in 2006 and built a lead through localised products such as cameras tuned for darker skin tones, once derived roughly half its revenue from the continent. According to consultancy Frost & Sullivan, it held a 61.5% share of African handset sales in 2024.

Yet volume is now falling. African phone shipments were 96 million, 106 million and 104 million units in 2022–2024, before plunging 19.23% to 42 million units in the first half of 2025. Distributor numbers are contracting as well: Transsion had 2,981 distributors at mid-2025, 281 fewer than at the end of last year.

Low-End Strategy Meets Its Limits

Transsion’s rise was built on early, deeply localised expansion in Africa and support from China’s smartphone supply chain. It created a three-brand portfolio—TECNO for mid- to high-end users, Infinix for younger consumers and itel for mass-market buyers—focusing on features such as dual-SIM, long battery life and robust hardware at low price points.

But its heavy dependence on low-end devices has become a liability. As rivals such as Xiaomi and Honor Device expand in Africa, price competition has intensified. At the same time, a surge in memory-chip prices has pushed up production costs, which are difficult to pass through to budget-conscious customers.

Transsion has tweaked pricing, but at the cost of margins. The average selling price of its smartphones slipped from RMB 551.4 in 2022 to RMB 543.8 in 2024, before edging up to RMB 547.5 in the first half of 2025. Feature phone prices fell more steeply, from RMB 65.5 to RMB 50.1 over the same period.

Phone gross margins have trended lower despite some volatility, at 19.1%, 22.9%, 20.2% and 18.5% over the past four reporting periods. The company faces a strategic dilemma: discounting helps defend share but undermines earnings, while moving upmarket pits it against stronger global brands.

Building a Phone-Centric Ecosystem

To reduce reliance on handsets, Transsion is building a smartphone-centric ecosystem, echoing in structure—though not in scale—the model of Xiaomi. It now reports three segments: phones, mobile internet services and Internet-of-Things (IoT) and other products.

The non-phone businesses remain small but are growing. In the first half of 2025, Transsion booked total revenue of RMB 29.28 billion. Mobile internet services, which mainly monetise its self-developed phone operating system via app distribution and games, contributed RMB 417 million, or 1.4% of revenue. IoT and other products generated RMB 2.57 billion, or 8.8%.

IoT offerings combine hardware and software across home, work and mobility scenarios. Hardware includes laptops, tablets, wireless earphones, smartwatches, appliances, energy-storage devices and light electric vehicles. Software focuses on connectivity and intelligent control to tie these products into a unified ecosystem.

For Africa, Transsion has tailored appliances such as kitchen devices optimised for cooking local dishes, aiming to leverage its distribution network and brand recognition in lower-tier markets.

Betting on Light Electric Mobility

The most ambitious—and capital-intensive—piece of Transsion’s diversification is light electric mobility in emerging markets. The company is targeting a segment where motorcycles and three-wheelers are core to daily transport and livelihoods, and where electrification is seen as a way to cut fuel costs and emissions.

Transsion has introduced two light EV product lines: Revoo, aimed at personal commuting and delivery services, and TankVolt, a range of electric two- and three-wheelers designed for passenger and cargo transport. The company is rolling out charging and battery-swapping solutions for these vehicles and has already expanded the business into Kenya and Tanzania.

The addressable market is sizable and growing. According to its prospectus, the light electric mobility market in emerging economies expanded from US 7.3 billion in 2020 to US 12.3 billion in 2024, a compound annual growth rate of 13.9%, and is projected to reach US$25.4 billion by 2029. The growth outlook has attracted multiple entrants, including Zeno, an electric transport company founded by a former Tesla executive, which has also moved into Africa.

Infrastructure and Capital Demands

Transsion’s EV push faces structural headwinds. Unlike China, many African markets suffer from unreliable power supply, complicating the rollout of electric vehicles and supporting infrastructure. Building charging networks, battery-swapping stations and battery-leasing systems will require significant upfront investment and partnerships, with long payback periods.

The planned Hong Kong share sale is designed to fund this transition. According to its prospectus, Transsion intends to use proceeds to deepen investment in mobile internet services and IoT products, accelerate research and development in artificial intelligence, speed up product iteration, and strengthen marketing and brand-building in its core emerging markets.

Management presents the strategy as a necessary evolution: shifting from a single-product handset manufacturer to a global technology company anchored in Africa and other high-growth regions. Investors will be weighing whether the company can execute that pivot fast enough to offset the slowdown in its traditional phone franchise.