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

Thursday, May 29, 2014

A move by the Kenya communication regulator to license three mobile virtual network operators (MNVO) – that don’t own their own communication infrastructure – is expected to expected to increase competition in the mobile money segment of the market that has been for the last couple of year dominated by a single player.

The east African nation is known for its world-leading mobile money service that has revolutionized payment, savings and credit systems in the country, but what the world doesn’t know is that the service is dominated by Vodafone’s subsidiary, Safaricom, which commands nearly 70 percent of the mobile service market in Kenya.

With this dominance Safaricom has been charging an arm and a leg for its services.

To reduce this dominance and improve competition, Kenya’s Communication Commission (CCK) licenses Zioncell, Tangaza Pesa and Fincell (a subsidiary of Equity Bank) as MNVO’s, allowing them to provide all forms of services to customers using the communications infrastructure of any mobile network operator.

This means the three new operators can provide cellular mobile money services without holding a spectrum license. All the three MNVO’s will utilize Airtel Kenya’s infrastructure.

“We believe that the entry of the MVNOs into the market will stimulate and sustain overall market growth through a new range of innovative products and service propositions that will give more choice and value to Kenyans,” Airtel Kenya former managing director Shivan Bhargava said following the issuance of the three licenses.

“Their entry into the market will increase the uptake of mobile services in key segments such as mobile commerce and data thereby accelerating the inclusion of all Kenyans into the mobile revolution for sustained economic development of the country.”