We all know the story of Safaricom, languishing in the backwaters of its big brother Telecom Kenya, with meager resources and a small team, to its surprising tear-off and eventual positioning with per second billing that delivered hockey stick growth. The nature of any technology based business is that sooner or later the growth line plateaus and the challenges of enterprise which are much different from those of the startup phase begin to bite, more so if one is publicly listed.
The only kink in the Safaricom chain is its local status, defined by national borders it has to figure out a localized growth strategy with price wars and big marketing budgets counting for naught once we hit 110% mobile penetration. The only issue presented by this fish bowl vs pond scenario, is that those in the ecosystem previously engaged as partners are the first to go as their business models and therefore revenue having been exposed make for easy pickings.
Enter the unified licenses and the mobile value added services was the first casualty with the telco dipping in and by industry numbers delivering the equivalent of a swift uppercut to a cohort of partners who had validated business models and done a lot of consumer education driving up the average return per user for the telco. Pivots and service differentiation have been the only saving grace for those that saw it coming.
Next in line are banks and aggregators who have built businesses or augmented services based on the mobile money service Mpesa. Banks, I am particularly worried about. There is strength in numbers but the silo’d and selfish approach to service delivery by the odd 42, has seen Safaricom infiltrate under the guise of banking the unbanked and connecting to a good number of the financial service providers. There can only be so many people doing person to person transfers and the focus over the past year has been on person to business. The Mpesa Generation Two (G2) platform is about ready with a business to business offering that will blow a hole in the hull of these big financial service ships and the decent to the bottom as banking is reinvented could be swift. Mpesa will essentially mop up cash and redirect the flow of money to entirely within its pipes; no more Mpesa to Bank to Bank via real time gross settlement (RTGS). For aggregators building payment solutions that hinge on Mpesa, there is protection in the niches and value adds, markets where Safaricom do not see as lucrative yet. Either that or like the cryptocurrency pioneers, a diversified footprint that would deliver value to a wider base of the 800 global mobile network operators.
With the transport play, the drive for government payments and the dash for B2B payments painting the bigger picture, you cannot blame smart people for making smart strategic moves.