Is Equitel about to dethrone Safaricom’s mighty mobile status? - CNBC Africa

Is Equitel about to dethrone Safaricom’s mighty mobile status?

East Africa

by Thabile Manala 0

Equity Bank is set to rival Safaricom’s monopoly on mobile-money. PHOTO: sourced from:

Equity Bank is set to rival Safaricom’s monopoly on mobile-money by bringing financial services to the poorest in Kenya.

Kenyans will soon be benefitting from low mobile charges when using their phones in Europe and Africa to send money.

Currently, the money network developed by Safaricom called M-pesa accounts for more than 95 per cent of that market in the east African country.

However, according to reports, the tides are changing. Airtel, one of Safaricom’s rivals, has presented a demand for allocation of a 4G radio spectrum.

Equity Bank has joined forces with Airtel in acquiring a licence to operate a mobile phone service. Their joint venture titled Equitel, will launch a service that uses “thin SIMs”, plastic sheets embedded with microchips that slip over the top of a standard SIM card and let the user switch between operators easily, according to reports.

“It would also benefit if regulators insisted on cheaper and easier interoperability, bringing its Airtel Money system into the M-Pesa orbit," said the reports.

Equitel’s notable advantage is a promise to charge a fraction of Safaricom’s fees for money transfers.

In competitive response, Safaricom has signed agreements with international operators and governments which allow it to offer lower roaming rates in 21 countries.

Subscribers will be able to access 10 minutes of voice calls, 10 text messages and 10 megabytes of data for just 200 Kenyan Shillings.

This is a “significant reduction” according to Safaricom's chief executive, Bob Collymore. This is on the backdrop of high money transfers up to 10 per cent of the market value.

According to reports, the company has also penalised users calling other networks. Since Kenya does not have genuine interoperability—in which funds can be sent from one system to another without punitive charges—it is  inconvenient for consumers to be divided between several operators, and if customers of one could not send money to those of another.

The UK phone giant Vodafone owns 40 per cent of Safaricom and the Kenyan government 35 per cent. Last year Safaricom paid the country $400 million in fees, taxes and dividends as the country’s biggest taxpayer.