Kenya: Safaricom Girds Up for Equitel-Mpesa Battle

A year ago, Equity Bank introduced a new technology -the thin SIM card- to the Kenyan market. A thin SIM card allows users to have two SIM card on one phone, saving you the hassle of buying and carrying about two phones.

However, and more importantly, Equity Bank's intention then, as it is now, was to use the thin SIM technology to enter the mobile money market.

The ultimate intention is to challenge Safaricom's grip on the mobile money market, or as one would put it the Kenyan way, their MPesa stronghold.

Equity Bank basically wants to eat Safaricom's lunch, dinner and breakfast, a feat other competitors have tried and failed miserably at, and as if to rub it in, Equity is not hiding its intentions, perhaps motivated by a previous M-Kesho collaboration that went sour.

Safaricom of course, did not like the thin SIM card technology, nor Equity Bank's poorly hidden intentions to dislodge the MPESA jewel from its privileged position in the crown of Safaricom services, and so it waged and lost the battle to stop the introduction of thin-SIM technology into the country.

Eventually, the Communications Authority of Kenya (CA) allowed Equity Bank to launch the technology under the trademark Equitel, and it currently boasts more than a million subscribers after less than two months of operation.

But Safaricom understands that losing a battle is not the same as losing the war, and so it recently opened a new battlefront by doubling the commission paid by Equitel subscribers wishing to transfer their money to MPESA subscribers. In Twitter correspondence, Equity Bank confirmed the above turn of events and conceded the move was beyond their control.

THE GREEN ELEPHANT

And so the war continues for the control of the multibillion-shilling business that moves between mobile money subscribers.

The unwritten message from Safaricom to Equitel's prospective subscribers seems to be that if it is expensive to transfer money to 76 per cent of subscribers in Kenya - which is Safaricom's market share of the mobile money market - then one should really not be signing up for Equitel services.

In one single move, Safaricom has potentially pulled the rag from under Equity Bank's poorly hidden plan to eat their lunch, dinner and breakfast. The green elephant is clearly not in a laughing mood.

Many may celebrate the move as a brilliant corporate response, executed with a clinical finish against a competitor who had joined a fight that was clearly out of their league, a deserved response to an ill-behaved competitor who dared to cross the red line that has buried many competitors before and awaits the burial of many others in future.

However, others may want to be cautious and ask a few questions. At what point does competition cease to be beneficial and begin to sacrifice the public good?

It may be good to have one very successful mobile money operator, but might we be safer if we had two or three other moderately successful mobile money operators?

What role, if any, can the regulators have in the prevailing circumstances?

While agreeing that the mobile money market in Kenya owes its success to the principle of "non-regulatory interventions" exercised during its nascent stage, it may perhaps be time to review the regime ten years later.

How do you regulate a service whose value proposition is not located within one operator, but cuts across multiple players and includes banks, application providers, merchants and of course competitors?

Mr Walubengo is a lecturer at the Multimedia University of Kenya's Faculty of Computing and IT.

SOURCE:DAILYNATION