Safaricom To Share M-Pesa Agents Network As Condition For YuMobile Acquisition

The rivalry between Kenya’s top two telecommunications companies, Safaricom and Airtel may finally come to an end if the stringent conditions set by sector regulator, Communications Authority of Kenya (CAK) on the acquisition of yuMobile is met.  The conditions set by CAK is aimed at forcing the two mobile companies to open up their networks and share infrastructures with existing players while giving room for new entrants. Also, the networks are supposed to share their mobile money platforms with other operators.

Francis Wangusi, CAK Director General said approval is dependent on both telecoms companies “submitting to the authority, for approval, a framework for sharing agent outlets for various mobile consumer services including money transfer services and SIM registration centers,” adding that unless the conditions are met, the acquisition will not be approved.  The decision by the regulatory body to tie the acquisition to the sharing of the mobile money platforms is a major bottleneck for Safaricom which runs the most successful mobile money platform, M-Pesa, in the country.

Previous moves by Airtel to get Safaricom to open up its M-Pesa agency network to other operators has been strongly and successfully opposed by the telecoms giant, which claims it invests in excess of Sh1.2 billion ($13.8 million) annually in building and maintaining its agency networks.

Safaricom’s strong hold on its network has stifled inter-operations and competition between mobile money operators.  The CAK has strategically used the acquisition of yuMobile by Safaricom to enforce what it has been unable to achieve prior to the deal – create the ideal environment for product innovation and healthy competition.

Safaricom’s Chief Executive, Bob Collymore is faced with a hard decision as he weighs the impact of opening up its most thriving business line to other operators against the acquisition of yumobile.  The acquisition, valued at Sh8.6 billion ($100 million), involves Safaricom taking over yuMobile’s infrastructure and Airtel acquiring the firm’s 2.7 million subscribers.  If Collymore agrees to CAK’s conditions, the long term rivalry that exists between Safaricom and Airtel over sharing of their mobile money agency networks might finally come to an end.

Copyright Ventures Africa 2014