Fight for mobile billions to go notch higher

Woman speaking on a mobile phone. Three companies — Equity Bank’s Finserve, Tangaza Pesa and Zioncell — were licensed in 2014 to run telcom business in Kenya. PHOTO | FILE 

In Summary

• Safaricom took on Equity Bank’s Finserve over the use of thin SIM technology in cash transfer business

By CHARLES WOKABI
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The battle for the control of billions of shillings moved through mobile platforms is set to intensify in 2015 as new entrants to the market start business.

Three companies — Equity Bank’s Finserve, Tangaza Pesa and Zioncell — were licensed in 2014 to run telcom business in Kenya. The firms have all set mobile money services as their primary focus. Of the three, only Finserve has started operations.

However, the launch of Equity’s service was met by stiff opposition from Safaricom. The mobile firmw filed complaints with the Communications Authority saying Equity’s thin SIM technology would expose its 14 million M-Pesa customers to fraud.

The intensity of the ensuing fight for a share of the mobile money market was clearly demonstrated as the two corporate giants flexed muscles in a bid to influence the regulator’s ruling on whether or not the thin SIM technology would be deployed in the country.

For years, Kenya’s mobile money market has been dominated by Safaricom through its flagship M-Pesa brand and attempts by other firms to replicate its success have failed.

However, Equity Bank brings a new dance to the game, which is the reason its entry has unsettled the market.

If Equity Bank manages to transform all its 8.7 million bank account holders into subscribers on its mobile money platform, the lender will be propelled to become Kenya’s second largest telcom firm after Safaricom.

The other two companies are expected to deploy their services in 2015.

Kenya Airways has also signed a partnership with Airtel Kenya, setting the stage for the airline to roll out telcom services. 

“With new licences expected to start operations and existing operators investing into expansion strategies, we anticipate a very competitive environment in 2015,” Communication Authority director-general Francis Wangusi told Smart Company.

Mobile companies have moved to diversify their revenue sources as earnings from voice continue to decline. Companies are now investing in other revenue streams such as data and cash transfer.

At the moment, Safaricom is testing a new M-Pesa platform which is expected to be launched before Christmas. The new service will allow the system to handle more transactions and cut downtime.

Evolution of e-commerce and a push towards converting Kenya into a cash-lite economy is also expected to drive innovation and competition in mobile money business.

Tighter grip

This means that the fight among mobile money firms will shift from making the biggest transfers to gaining a tighter grip on the growing retail payments market.

In the first six months of 2014, Kenyan consumers transferred over Sh1 trillion through mobile, according to data released by the Central Bank of Kenya.

Kenya has five main mobile money platforms — Safaricom’s M-Pesa, Airtel Money, Orange Money, MobiKash and Tangaza Pesa, backed by a network of about 120,781 agents.

Central Bank data shows that the value of mobile money transactions more than tripled in the past five years to Sh1.1 trillion compared to Sh322.5 billion recorded in the first six months of 2010.