Telkom Kenya Revamps its Mobile Money, Should Safaricom’s MPESA Worry?

By Juma Fredrick and Amina Faki

Telkom Kenya, the third largest mobile operator in Kenya, will be shutting down Orange Money on 4^th July 2017 amid implementation of a new mobile money service. The question many Kenyans are now asking is, should Safaricom, the one always seen as the indisputable king in the telecommunication sector in Kenya be worried?

READ: Why Dominance Will Soon Kill Our Economy Unless We Wake Up 

The mobile operator, Orange Telkom, is implementing a new and improved Mobile Money service which will be in force in the next 30 days during which Orange Money customers will still be able to have normal transactions using Orange Money Services.

This is a move that the mobile operator is putting into action to give way for new, improved and exciting products and services to compete favorably in the market with Kenya’s dominant mobile network like Safaricom.

In 2011, Orange Money was launched in Kenya with basic services: cash-in and cash-out, airtime top-up, Orange bills payment. In addition, the service now includes water and electricity bill payment in most countries, and the possibility to access savings and insurance products.

READ: Orange and Google Sign Partnership to Increase Access to Mobile Internet Services Across East Africa. 

According to a statement from the telecommunication, after 4^th July 2017, any funds remaining with Orange Money Services will be accessible through a customer’s Equity Bank account that’s linked to their Orange money account. The money can be accessed at Equity Bank ATMs, Equity Bank Branches and Equity agents across the country.

All Telkom Kenya (Orange mobile) customers need to access their money is a relevant identification (National ID, Passport, or Alien Card) for any transactions from the account linked to their Orange Money account. Equity Bank will address the issue to its customers on important account information.

What Orange Money means to the Kenyan Market

In a quarterly report released by Communication Authority of Kenya (CAK)  for 2016/2017 telecommunication statistics in Kenya,  the number of mobile money subscriptions was recorded at 31.9 million subscriptions while the number of active mobile money transfer agents stood at 161,583.

The volume of transactions, according to the report, (deposits and withdrawals) on mobile money platform was registered at 456.6 million with 1.1 trillion Kenya Shillings transferred during the period. Mobile commerce recorded a total of 262.6 million transactions with 586.4 billion Kenya Shillings used to pay for goods and services. The person-to-person transfers amounted to 515.9 billion Kenya Shillings during the period.

Of all these, Orange Telkom had 800 agents, 194,322 subscriptions, 31,000 transactions, 80,029,000 shillings transacted during the period with a 232,014 mobile commerce transactions while the person to person transaction stood at 4,456,990 shillings as shown in the image below:

During the period, according to the report, Telkom Kenya Limited experienced a marginal decline in the number of pre-paid subscriptions by 0.3 percent to post 2.88 million subscriptions down from 2.89 million subscriptions recorded in the previous quarter. However, post-paid mobile subscriptions grew by 5.3 per cent to stand at 8,871 up from 8,424 subscriptions recorded in the previous quarter. The total subscriptions were registered at 2.8 million down from 2.9 million subscriptions reported during the previous quarter as shown in the image below:

What is the market share for Orange?

The following image shows Orange Telkom’s market share

Should Safaricom Limited be worried?

Most economic analysts feel that there is nothing for Safaricom Limited to worry because the company has already built a name. There are, however, those who feel that Safaricom should worry with this new rebranding of Orange Telkom. They say that if indeed Orange is going to partner with Equitel, the mobile money transfer is going to shift and Safaricom is likely to feel the heat.