NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, July 1, 2014

Players in the traditional telecoms market have struggled in countries where extensive infrastructure is needed

Mobile virtual network operators (MVNOs) are set to shake things up and challenge established players in the African telecom market.

South Africa has had an MVNO operating in the country for some time. But MVNOs have recently been awarded licenses in Nigeria, Kenya, Uganda, Tanzania and Rwanda.

Players in the traditional telecoms market like Orange and Essar have struggled in new markets where extensive infrastructure and capital expenditure is needed. MVNOs depend on existing telecoms infrastructure and only provide services.

Equity Bank, Kenya’s largest bank in terms of customer base, recently received its MVNO license from the Communications Authority in the country, and is partnering with Airtel to launch a suite of services targeting Tanzania, Rwanda and Uganda, where it also has operations.

“We will provide a full suite of banking services on your mobile; allowing you to enjoy the convergence of all financial products on all channels, credit, savings, insurance, payments, transaction processing, brokerage, custodial and investment services,” said James Mwangi, CEO of Equity.

Equity has kept transaction fees for its mobile money services low, to rival those provided by M-pesa, the most common mobile money platform, operated by Safaricom.

“We cannot comment authoritatively on the likely impact the entry of MVNOs will have on our mobile money revenue stream in the short term; however, we can state that M-Pesa and M-Shwari (mobile credit) operate in a competitive environment and as a business, we have in place, business strategies necessary to enable us secure M-Pesa’s and M-Shwari’s leadership positions,” said Nzioka Waita, Safaricom Corporate Affairs Director.