No plans to follow Airtel’s vision for inclusion
Kenyan mobile operator Safaricom does not plan to split its telecom business from its successful mobile money service M-Pesa, for now, chairman Michael Joseph has told the media. Joseph was reacting to media speculation after its domestic rival Airtel announced the separation of its mobile banking and telecoms services to “better serve customers” with a suggestion that a split would benefit Kenyan society.
The previous week (October 11) the Central Bank of Kenya (CBK) announced the separation of the mobile money business from the telecommunications business which were previously under Airtel Networks Kenya Limited (ANKL). In a statement, CBK said the Airtel Money sideline will now operate under Airtel Money Kenya Limited (AMKL). The restructuring lets AMKL ring-fence its operations and focus exclusively on its mobile money business, said a CBK statement. Continued use of the Airtel money service would prove the customer’s acceptance of the transfer of their account and related customer data, it said.
There has been pressure on Safaricom to split its business, which dominates both Kenya’s mobile money market and its wireless industry. However Kenyan MPs have so far resisted debating a Bill that could compel all telcos to split their voice and data business from their mobile money transfer and lending units. In March M-Pesa declared an annual profit of Sh50 billion (€425 million) before tax, generating nearly half of the Kenyan mobile operator’s total gross earnings and easily Safaricom’s most profitable service. This was the first time M-Pesa performance was listed separately in the telco’s profit announcements, which previously just reported the mobile banks contribution to revenues. Voice has traditionally been Safaricom’s leading revenue stream.
Safaricom announced at the time that it had invented a way to channel the business through its partners. It created a system telco software developers to build their own platforms within the M-Pesa Super Apps. It is now working with software developers to create ‘mini apps’ which extend its services offering through a channel of businesses.
Campaigners want M-Pesa and Safaricom’s mobile services to operate as two separate entities, with different boards, brands and regulators, reports AllAfrica. If this is implemented the Communications Authority of Kenya will regulate Safaricom’s mobile unit, while M-Pesa will be under the purview of the Central Bank of Kenya.
If M-Pesa split from Safaricom a wider range of services, such as high-value loans, might become options for the service. “Such a split will provide a level playing field for the other players in the sector,” said All Africa.
Safaricom’s market share in voice, data and mobile money is bigger than shares of its competitors, Airtel Kenya and Telkom, combined. Safaricom has 69% of mobile subscriptions, transports 68% of all data and services 99% of all mobile money transactions.
Airtel Africa is headquartered in Dubai, United Arab Emirates, has operations in 14 African countries and is listed on the London Stock Exchange. It claimed that its splitting of telco and mobile banking divisions will help the nation realise the vision in the National Payments Strategy 2022 – 2025. “A secure, fast, efficient and collaborative payments system [would] support financial inclusion and innovations that benefit Kenyans,” it said in a statement.