It is always fun to sit and watch industries morph as technology becomes cheaper or regulation changes lowering the barriers to entry. The latest dance to pique my interest has been that of mobile juggernaut Safaricom and their banking sector peer Equity bank. Regulatory changes have not been kind to Safaricom in many respects; their first line competition has been busy pushing for the opening up of their agency network, which pundits have often cited as their biggest strength and now new players by way of recently licensed mobile virtual network operators are angling for a piece of the current telecoms pie.
Equity Bank through their Equitel brand seem to be the only ones with a solid strategy right of the starting blocks, trying to control as many factors of production as possible. They already have the highest return on assets for any bank globally and their mvno license would allow them to run Equitel at cost. This will see them drive other profit centers that have higher returns than the telco measure of value called ARPU – average return per user. Any residual net revenues that the outfit will bring can be viewed as simply good to have but not necessary. Theirs is not a pure telco play, but Safaricom is working hard to slow down the inevitable having tasted the impact on the bottom line that financial services can bring.
Tangaza is looking to strengthen its mobile money product, probably tired of riding off everyone else and sharing margin. For Mode, who have a successful mobile credit advance business across the continent, their game is yet to emerge, since their business can be viewed as pure VAS – value added services, that can be incorporated into the service book of any mobile operator. ZionCell, Mode’s MVNO subsidiary currently have a church focused fundraising service in the offing. National carrier Kenya Airways are mulling over ways to increase the value per seat sold which would need them to remain connected to their customer beyond the airport gates. A well thought out service would have them offer the millions of foreign frequent travellers into Kenya a communication solution that works out of the box with registration and KYC already done.
The thing with all the current moves is that they overlap and therefore by default make all players tier one competitors, which will lead sooner or later to price wars or unsustainable service bundles with short term defensive KPI’s. In my opinion the winner in the emergent telco ecosystem, will be one who exploits green field opportunities with first mover advantage, with higher barriers to entry created simply by the nature of the service offered; a move that will probably focus on things and not people.