Technology

Mobile network operators set for stiff competition

Competition

Regulatory changes have not been kind to Safaricom in many respects. PHOTO | FILE | NATION MEDIA GROUP

It is always fun to sit and watch industries morph as technology becomes cheaper or regulation changes. The latest dance to pique my interest has been that of mobile juggernaut Safaricom and Equity bank.

Regulatory changes have not been kind to Safaricom in many respects. Its first line competition has been busy pushing for the opening up of Safaricom’s agency network, which pundits have often cited as the firm’s biggest strength. Now new players by way of recently licensed mobile virtual network operators (MVNO) are angling for a piece of the current telecoms pie.

Equity Bank, through the Equitel brand, seems to be the only one with a solid strategy right of the starting blocks, trying to control as many factors of production as possible.

It already has the highest return on assets for any bank globally and the MVNO license would allow it run Equitel at cost. This will see it drive other profit centres that have higher returns than the telco measure of value called ARPU – average return per user.

Any residual net revenues that the outfit will bring can be viewed as simply good to have but not necessary. Equity’s is not a pure telco play, but Safaricom is working hard to slow down the inevitable having tasted the impact on the bottom line that financial services can bring.

Tangaza is looking to strengthen its mobile money product, probably tired of riding off everyone else and sharing margins. For Mode, which has a successful mobile credit advance business across the continent, its game is yet to emerge since its business can be viewed as pure value added services that can be incorporated into the service book of any mobile operator.

ZionCell, Mode’s MVNO subsidiary, currently has a church-focused fundraising service in the offing.

National carrier Kenya Airways is mulling ways to increase the value per seat sold, which would need the carrier to remain connected to the customer beyond the airport. A well thought out service would have it offer the millions of foreign travellers into Kenya a communication solution that works out of the box with registration and KYC (know your customer) already done.

All the current moves overlap and, therefore, by default make all players tier one competitors, which will lead sooner or later to price wars or unsustainable service bundles. The winner in the emergent telco ecosystem will be one who exploits green field opportunities with first mover advantage; a move that will probably focus on things and not people.
Mbugua Njihia is CEO of Symbiotic | Twitter - @mbuguanjihia