Kenya’s largest telecom service provider, Safaricom might be set for fresh legal battle as the Kenyan parliament is reportedly pushing for a split between its mobile services arm and its famed mobile money service, M-Pesa.
According to reports, a majority of the lawmakers want the mobile services arm and the payments division to operate as two separate entities, with different boards, brands, and regulators.
If this is implemented, Safaricom’s mobile unit will be regulated by the Communications Authority of Kenya, while M-Pesa will be under the purview of the Central Bank of Kenya.
This move seems based on the recommendations of British consulting firm, Analysys Mason, which earlier opined that Safaricom should be split from its famed mobile money unit.
It is the belief of the lawmakers that such a split will provide a level playing field for the other players in the sector.
However, if this move is implemented, it could have telling consequences for Safaricom and raises a number of questions for the telecom sector.
Safaricom’s market share in voice, data and mobile money is bigger than shares of its competitors, Airtel Kenya and Telkom, combined. Safaricom controls over 60% for mobile subscriptions 68% for data and up to 99% for mobile money.
M-Pesa has long been described as one of the greatest success stories of mobile money in the world, and its use became important with the onset of the pandemic.
The Kenyan government ordered waivers on fees for mobile money transactions in order to facilitate cashless payments, causing further increased usage.
In recent weeks telecom operators have begun pushing for a return of transaction fees as mobile money operators began to deal with the effects of the fee waiver.
In its half-year financial report, Safaricom’s profits slumped 6% due to scrapped fees of mobile money. Though voice revenues have remained the cash cow, there’s growing sentiment that it might have peaked as it settles into a slow and gradual decline.
It is therefore evident that data, and mobile money could be the future for most telecom operators.
While the move might seem well-intentioned, it might create an air of uncertainty around the telecom market or bring more direct involvement on the part of the government as was seen in Ghana, where the government is preparing takeover stakes from Airtel’s operations.
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