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TMCNet:  Safaricom braces for opening of M-Pesa to rivals [Business Daily (Kenya)]

[June 08, 2014]

Safaricom braces for opening of M-Pesa to rivals [Business Daily (Kenya)]

(Business Daily (Kenya) Via Acquire Media NewsEdge) Safaricom is bracing itself for an upcoming ruling by the competition watchdog, which could force it to open up its M-Pesa agency network to rivals.

M-Pesa's popularity, which has won it 18.1 million customers since its launch in 2007, has largely been attributed to its vast network of agents across the country that makes it easy for users to deposit and withdraw cash from mobile phones.


Airtel, Orange and yuMobile, on the other hand, have relatively small networks of agency shops, making it difficult for their users to transact business using their phones.

However, a ruling by the Competition Authority of Kenya (CAK) which is expected by June 30, could force Safaricom to allow Airtel, yuMobile and Orange users to withdraw and deposit cash freely at M-Pesa agent shops.

Safaricom says its already preparing for this eventuality, which threatens its dominance in the lucrative mobile money transfer services.

"Due to the growing pervasiveness of mobile money platforms globally, it is now necessary to pursue a standards-led discussion on interoperability," said Nzioka Waita, the director of corporate affairs at Safaricom.

Last week, three Tanzanian telecom operators – Tigo, Zantel and Airtel – announced an agreement that will allow customers to send mobile money freely across their networks, indicating the shifting ground in the industry.

READ: Tanzania telcos in Africa's first 'interoperable' mobile money pact CAK director-general Wang'ombe Kariuki said the authority will give its ruling on Safaricom's alleged abuse of its dominant position by locking out rivals from its vast network of mobile money agents by the end of this month.

The petition had been filed by Airtel. Safaricom, which has repeatedly denied the accusation of unfair dominance and Airtel's push for interoperability, now says it is not opposed to the idea of opening up its M-Pesa network to other players.

The telco, however, says there is need for rules to be set detailing just how inter-operability will work, including the sharing of earnings between competitor firms and their agents.

The duration to set rules of mobile money network interoperability could take up to two years, buying Safaricom time to prepare for the change.

Liberalisation of the platforms could be a huge victory for Airtel, which has been relentlessly pushing this agenda. Last year, it filed a complaint against Safaricom at CAK and at the High Court.

Airtel accuses Safaricom, whose share of the mobile money market stands at 73 per cent, of pricing it out of business by keeping the costs of transactions for unregistered users at double that of registered customers.

READ: Airtel challenges Safaricom supremacy in money-transfer industry Safaricom treats cash recipients in other networks as unregistered users. Since M-Pesa is an SMS-based service, Airtel argued in court, the cost charged should not be more than the Sh2 it costs the operator to terminate an SMS from a different operator.

"We have made extensive progress on this matter as part of an out-of-court settlement agreed upon by both parties. By the end of this month, we shall have made a ruling," said Mr Kariuki.

Airtel also says that since Safaricom's agents account for 88 per cent of all agents in the telecom industry, the bulk of the mobile money transactions are restricted to its network, allegedly denying Kenyans freedom of choice.

mokuttah@ke.nationmedia.com ; pmutegi@ke.nationmedia.com (c) 2014 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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