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Safaricom brushes off threat from new entrants

Safaricom CEO Bob Collymore. FILE
Safaricom CEO Bob Collymore. FILE 

Safaricom’s chief executive says there are no plans to reduce M-Pesa tariffs even as new rivals enter the mobile money arena and gain access to the company’s agent network.

Bob Collymore played down the anticipated impact of three newly licensed mobile virtual network operators, including an Equity Bank subsidiary whose overlay SIM card technology his firm opposes.

“I don't anticipate a mobile money price war,” he told journalists and investors recently in an online chat-room session. “Don't forget that some of our competitors already offer free transactions.”

Mr Collymore added he was not worried about losing customers to the new entrants either.

“Customers have stayed with us because of the total proposition, which includes network size, coverage, speed and reliability,” he said. He added his priorities over the next year include improving the quality of the network, retaining high value subscribers and driving use of data and M-Pesa services.

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Safaricom has been fighting to keep new entrants from riding to easy profits on their infrastructure and business relationships.

Planned changes to the Kenya Information and Communication Act 2013 could see the firm forced to share its network with virtual network operators. The firm also faces a challenge before regulators from its rival Airtel that could change its M-Pesa practices.

These developments prompted questions about the risk of a hostile regulatory environment.

“When there's a big player like Safaricom in the market, there is always a risk that the regulatory environment becomes hostile,” Mr Collymore said. “The main issue will be around abuse of dominance and providing we don't act in an abusive manner then we're less worried about it.”

Equity Bank will this week introduce an overlay SIM card that will allow subscribers on rival networks to make cheap money transfers without having to give up their primary provider. Safaricom has objected to this piggy-back technology saying it could expose 12 million active M-Pesa users to the risk of fraud.

“Our concern about the slim SIM is its potential to compromise customer security,” the Safaricom CEO said Friday. “It is untested in markets where mobile money is widely used.” The firm has requested that the overlay SIMs be kept out of the market until they are cleared by the global GSM Association.

In response, Finserve – the Equity Bank subsidiary launching the service – has accused Safaricom of making alarmist and speculative allegations to quash competition in the mobile wallet segment.

Finserve’s proposed service will run on infrastructure owned by Airtel Kenya, which has been battling Safaricom for fair access to its network of M-Pesa agents.

Airtel says its larger rival should not charge Airtel Money users twice what M-Pesa subscribers are charged when dealing with the agents. The Competition Authority of Kenya is reviewing the matter and will announce its ruling “in due course”.

Asked to comment on the matter Friday, Mr Collymore insisted his firm was not acting improperly.

“Competition authorities are looking at the issue of exclusivity of M-Pesa agents,” he said. “We're not worried about it as (our M-Pesa) agents are already non-exclusive.”

Other matters that came up during the chat, which was organised by Thomson Reuters on Friday, included the prospect of new M-Pesa features and fibre at home services from Safaricom.

When asked about near field communication (tap-and-pay) technology for M-Pesa, Mr Collymore would only say the company was “looking at a range of cashless options”. He ruled out investment in fibre for home use saying the market is not yet big enough.

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