Corporate News
A Safaricom agent carries out an M-Pesa transaction. PHOTO | FILE
By GEOFFREY IRUNGU
In Summary
- The exit of yuMobile from the local market is also likely to further dampen competition to Safaricom, Citigroup Global Markets said in a report released on Friday.
- The analysts see room for the company’s growth in non-voice segments, namely, mobile money and data.
New entrants in the mobile money business are likely to pose minimal competition to Safaricom’s M-Pesa, analysts at Citigroup Global Markets have predicted in a research note on the company.
The exit of yuMobile from the local market is also likely to
further dampen competition to the giant telecom’s firm, the investment
bankers said in a report released on Friday.
Already several mobile virtual network operators (MVNOs) have been licensed even though they are yet to start business.
Besides Equitel, other licensed firms include Zioncell Kenya and Tangaza’s Mobile Pay. Kenya Airways also signed a deal with Airtel last August to offer the MVNO services.
“While these (MVNOs) may give the appearance of
added competition, they will struggle to dent Safaricom in our view,”
said the analysts.
Safaricom is also unlikely to face an aggressive
regulatory environment — even though it is a risk — due to its links
with the state, the Citi analysts predict. The Treasury holds a 35 per
cent stake in the company.
“Regulation is perhaps Safaricom’s biggest risk,
particularly the threat of the company opening up its infrastructure to
rivals. However, the government’s 35 per cent stake in Safaricom (the
only profitable operator) could dampen the inclination for very
aggressive regulatory interventions in our view,” said Citigroup.
The analysts see room for the company’s growth in non-voice segments, namely, mobile money and data.
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