Kenya’s New Mobile Networks:The case for MVNOs

The buzz over the past few weeks in the telco sector has been the news that we will now have three new networks operating in the mobile scene offering voice, data and Value Added Services riding on existing infrastructure.

Competition is always welcome in any industry and cant wait to sample their services. It is interesting that two of the 3 new entrants have a financial background showing that the M-Pesa hype has hit home with players salivating after it. One is Equity Bank Group through a proxy, Finserve Africa Ltd. The other license holder is Mobile Pay Ltd who operate Tangaza Pesa, a money transfer service. Mode comes in third dealing in Value added services for the mobile sector.

All of these networks apparently will run on Airtel Kenya’s unused capacity which makes me wonder exactly how much of their spectrum sits idly while people complain of congestion on Safaricom. Orange have been whining that CCK denied them the license to offer the MVNOs its spectrum. Quite frankly I would have refused too seeing as they seem hell bent on sitting on resources.

James Mwangi, Chief Executive Officer and Mana...
James Mwangi, Chief Executive Officer and Managing Director, Equity Bank, Kenya, panelist, “Igniting Innovation in Financial Access: Public & Private Approaches for Greater Access by 2020” (Photo credit: World Bank Photo Collection)

From a financial and business viewpoint, this is a sweet deal for Airtel. Have your expensive spectrum utilized, get some money in the bank. For the likes of Finserve Africa, Mode and Mobile Pay things couldn’t look rosier. They are having entry to an already ripe market (some would argue already plateauing) for peanuts as compared to the likes of Safaricom and the fights, struggles that Yu had to go through to start operating.

Setting up Base stations, cabling, software, human resources, license fees and all sorts of other costs leaves mobile operations to the big boys with deep pockets. The new entrants will have to spend especially in marketing but no worries about hardware land issues and spectrum drama. One institution to watch is Finserve Africa simply because it has access to deep pockets with a grudge. A short walk down memory lane will have us see that the much hyped M-Shwari used to be called M-Kesho when the account used to sit with Equity Bank. I know not why they fell out but the resultant loss of footing in the mobile money landscape is something Equity will definitely want to resolve asap.

And now for some free advice from me to Equity Bank. This is a game of attrition. A case of replacing the incumbent. In this regard you want to do precisely the opposite of what they are doing. When it comes to the primary interface with the customer, the phone is king. This is where you want your SIM card to be an option. Do not sell or promote single SIM devices at any cost. Exclusively flog dual SIM or triple SIM devices if and when the show up. The idea is to find space next to Safaricom in users lives. Do not seek to replace because you will fail miserably like Orange, Airtel and Yu. Once you sit next to Safaricom, Make everything cheaper and extremely tightly integrated with Equity bank accounts. All Equity customers are likely to get a SIM card just to see what this new fangled thing is from their favourite bank.

Now to slowly convert followers, offer everything cheaper than Safaricom. Whether its Data, SMS, Money Transfer etc. Then be more flexible than Safaricom in terms of modifying the product to fit your customers. Also being a bank, finally sort out this international payments thing with the CBK to make Paypal and related transactions seamless. Be the defacto payment method for online commerce tied to the mobile phone and you will have all the techies singing your name.

Attack Safaricom on fronts tat they would rather not fight in like opening the mobile money API to the internet for e-commerce.

This remains to be an eventful year and I cant wait to find a way to jump into it.

 

 

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