Airtel renews M-Pesa agents row with Safaricom

Corporate News

An Airtel Money shop in Nairobi. PHOTO | FILE 

By OKUTTAH MARK, mokuttah@ke.nationmedia.com

In Summary

• Airtel is accusing Safaricom of coercing its mobile money transfer agents to remove Airtel branding from their shops and stop offering Airtel Money services failure.
• The move, Airtel argues, is against a settlement the two firms had with the Competition Authority of Kenya (CAK) on July 18, 2014 removing exclusivity of the M-Pesa agents and allowing them to offer rivals’ services.
• Safaricom has denied the allegation, insisting that it has not instructed any agent to deface or remove Airtel’s logo from any premises.

Telecoms operator Airtel has renewed its battle with Safaricom over the sharing of mobile money agents one year after the competitions regulator helped the rival firms reach a negotiated settlement. 

Airtel, through its lawyers Mukite Musangi Advocates, has written to Safaricom accusing it of coercing its mobile money transfer agents to remove Airtel branding from their shops and stop offering Airtel Money services failure to which they would have their M-Pesa tills disconnected.

The move, Airtel argues, is against a settlement the two firms had with the Competition Authority of Kenya (CAK) on July 18, 2014 removing exclusivity of the M-Pesa agents and allowing them to offer rivals’ services.

Airtel claims that despite several assurances from Safaricom that it was investigating the matter, the defacing of Airtel’s branding has continued unabated and restrictions remain on M-Pesa agents offering services for rival firms.

Safaricom has denied the allegation, insisting that it has not instructed any agent to deface or remove Airtel’s logo from any premises.

“We have not issued any directives to our agents or dealers to remove or alter any branding in their shops. Without any evidence these claims amount to unsubstantiated allegations and a smear campaign against Safaricom,” said Stephen Chege, director of corporate affairs at Safaricom.

“In fact, we are currently involved in a court case with Airtel as they had previously pulled down Safaricom’s branding and were illegally using our M-Pesa logo without our consent.”

The negotiated settlement agreement meant that investors could now run M-Pesa services with those of its rivals such as Airtel Money and Orange Money (from Telkom Kenya) in the same premises.

Airtel said that Safaricom’s “conduct (the removal of Airtel money branding) would only serve to aggravate an existing dispute in court and could in fact very well lead to the emergence of additional litigation.”

Opening up of M-Pesa outlets to rival mobile money products was seen as a big win for Airtel, which had been pushing for integration of mobile money services at the distribution and technological level to encourage competition.

READ: Safaricom opens up M-Pesa agents' network

Ending the restrictions also meant that agents would earn more in commissions riding on Safaricom’s subscriber base.

The Communications Authority’s (CA) report for the first quarter of the year shows that Airtel lost 3.5 per cent of its Airtel Money subscribers in the three months under review to register 3,122,519 despite Safaricom’s decision to open up its vast M-Pesa agency network to rivals.

M-Pesa’s popularity, which has won it 21 million customers since its launch in 2007, is largely attributed to Safaricom’s vast network of agents that makes it easy for subscribers to deposit and withdraw cash.

Airtel, Orange and yuMobile, on the other hand, have a relatively smaller number of agents, making it difficult for their customers to make similar transactions using their phones.

Airtel has three million mobile money subscribers and 9,857 agents, while Orange has 192,531 subscribers with 15,984 agents.

Other operators in this sector include Mobikash with 1.7 million subscribers and 14,801 agents while Tangaza has slightly over half a million subscribers and 1,596 agents.

The competitive market landscape saw Airtel file a petition with the Competition Authority of Kenya (CAK) in 2012, asking the regulator to compel Safaricom to open up its agency network.

Airtel also wanted Safaricom’s pricing of its M-Pesa services investigated, arguing that its hire charges for money transfers to and from rival platforms is anti-competitive.

Airtel argues that since Safaricom’s mobile money agents account for about 88 per cent of the entire telecoms industry, most transactions take place on its network denying Kenyans choice by charging those outside its network double the costs.

Safaricom had previously dismissed Airtel’s accusations, arguing that M-Pesa is a proprietary product and that it should not be punished for its commercial success.

The push by Airtel comes as the industry regulator is preparing to hire an international firm that will examine Kenya’s telecommunication and broadcasting sectors for market dominance and anti-competitive behaviour.

READ: Airtel threatens Kenya exit over Safaricom ‘dominance

The consultant’s brief also includes review of existing policy, legal and regulatory frameworks on competition, recommending appropriate changes to enhance effectiveness as well as give remedies for issues identified.

The CA says the consultant’s report is expected to offer insights into the market status and facilitate decision-making in prescribing proportionate and appropriate regulatory actions.

Independent research will assist the authority in identifying and developing the key market interventions necessary to facilitate continued growth and economic efficiency in the sector, while promoting sustainable investments, access and affordability, the tender documents say.
The consultant is also required to propose the best ways by which the identified barriers and factors considered a hindrance to growth can be minimised or eliminated.

It is also expected to come up with specific stimulus that can be injected in the Internet/data sub-segment to ensure effective competition, accessibility, affordability and growth.