Equity Bank’s plans to launch telecom services in Kenya face another hurdle following an objection by one of the telecommunication players over the technology the bank intends to use to rollout.

In a letter to the Communications Authority, Safaricom chief executive Bob Collymore says Equity Bank should be prohibited from issuing thin SIM cards as it could expose subscribers to financial fraud and intercepted communication.

Kenya’s largest mobile company wants the Communications Authority to invite the GSM Association — which represents the interests of mobile operators worldwide — to review the risk posed by the technology to other mobile operators and subscribers.

“In the meantime, we call on the Communications Authority to prohibit its use in Kenya,” Mr Collymore says in the letter copied to the Central Bank of Kenya and Equity Bank through its subsidiary, Finserve.

The SIM in contention is paper-thin and is embedded with a chip. Users overlay it on their primary SIM card, regardless of the network, and can subsequently receive services from two mobile service providers simultaneously. Its use means Equity Bank does not have to issue its own SIM cards but could ride on the existing ones.


Safaricom’s major concern is the security of its money transfer service, M-Pesa, which it says would be vulnerable to attacks.

“It would compromise the security of the M-Pesa system and consequently expose our 19 million M-Pesa subscribers to irreparable harm,” says Mr Collymore.

Contacted, Equity Bank chief executive James Mwangi dismissed Safaricom’s concerns as baseless.

In a phone interview, Mr Mwangi said SIM overlay technology does nothing more than provide dual SIM capability without the need to change handsets.  The product, he said, is needed if Kenyan subscribers are to have true choice in telecom services.

“The opposition by Safaricom is speculative and would require technical proof. To the extent that the thin SIM has not been rolled out, they cannot allege without proof,” he said.

Mr Mwangi said the company is on track to launch telecom services to the mass market this month despite the concerns raised by Safaricom and a court case by the Consumer Federation of Kenya (Cofek).

On 10 July, Mr Mwangi said the firm’s banking agents and the families of its staff would be issued with SIM cards.

Safaricom’s is the latest round of opposition to Equity’s ambitions to make an entry into the telecommunication sector. Cofek has filed a case in the High Court, questioning the manner in which Equity Bank and two other firms were granted licences by the Communications Authority to become mobile virtual network operators (MVNOs). Cofek’s concerns echo those raised by Telecommunication Service Providers of Kenya in May.

Finserve Africa Ltd was in April granted an MVNO licence alongside Mobile Pay Ltd and Zioncell. Equity Bank plans to use the Finserve licence to roll out mobile banking services independent of any operator. Customers will also be given data and voice services on the network.


Anticipating reluctance from some of its 8.7 million customers to migrate to the new network, Finserve said that it would give customers an option of using a special SIM card that would give them access to two networks simultaneously without the need for dual SIM phones.

Safaricom objects to the technology on four grounds. Most crucially, the company claims that the technology would be able to “intercept” and “distort” communication on the primary SIM card. 

Mobile operators who have issued the primary SIM would not be able to guarantee privacy, Safaricom argues. Further, the thin SIM could open the door for third parties to access M-Pesa wallets stored in the primary SIM card tool kit.

The company says the thin SIM technology leaves it vulnerable to hackers. Third parties would find it easy to access the thin SIM and through it, the primary SIM card and the information it stores, claims Safaricom.

“Once the thin SIM decrypts the security protocols on the USSD function, any party running the software of the thin SIM would have unfettered access to customers’ banks,” writes Mr Collymore.
Efforts by the government to register mobile subscribers could also be eroded. Safaricom says that third parties could mask themselves by “riding on the identities of the registered owner of the primary SIM.”

This could complicate the matter, especially at a time like now when Kenya is facing terror threats. The masterminds of the Westgate attack, which left more than 60 people dead, are said to have been aided by unregistered SIM cards, forcing the government to issue new tough laws on card registration. This effort, Safaricom says, could be compromised.

Another concern raised by Safaricom is that usage of the overlay technology would affect the quality of service of the primary carrier. The company also claims that the thin SIM would infringe on its intellectual property and its use should be restricted to cases where the issuer of the primary SIM has granted express permission.

Kenya’s communication sector regulator, the Communications Authority, takes signals on the approval of new technology from the GSM Association (GSMA), a body of telecom operators. According to Safaricom, the technology has not been sanctioned by GSMA.


In response to efforts by Smart Company to ascertain this claim, the GSMA said that it was yet to subject SIM overlay technology to its approval processes.

“As yet, this is not something that the GSMA has been involved in to any degree, therefore I am unable to give you a considered position on this,” GSMA media relations director Claire Cranton said in an e-mail.

Whether Safaricom’s arguments hold water will be determined by the Communications Authority. Finserve’s entry into the telecommunication sector has been seen as disruptive.

Through Equity Bank, the firm understands the low-end market and has the resources to back the roll-out of its services. Under the MVNO licensing structure, Finserve will not have to roll out its own infrastructure but will instead rely on that of Airtel, at a fee.

Through its mobile banking products, Finserve is targeting the same customer base that has turned M-Pesa into Safaricom’s cash cow.

Mobile money transfer fees will be charged at one per cent of the value of a transaction and capped at Sh25. M-Pesa customers pay a minimum of Sh3 and a maximum of Sh110 for transfers to registered users within Safaricom’s network.

As the Kenyan voice market becomes saturated and companies turn to value-added services for their revenue, usage of dual SIM cards has also risen.

Research in 2012 by the World Bank’s InfoDev programme found that Kenyans at the base of the pyramid owned multiple SIM cards in order to switch between operators based on the favourable service at a particular moment.

A thin SIM would eliminate the hassle associated with switching SIMs or acquiring a dual SIM phone.

If Equity Bank manages to transform all its 8.7 million bank account holders into subscribers on its mobile money platform, it will be catapulted into Kenya’s second largest telecom firm after Safaricom.

According to the Communications Authority, there were 31.3 million mobile subscriptions in Kenya as at December 2013. Safaricom claimed 20.8 million of those subscriptions.
The second largest telecom by subscriber numbers was Airtel, with 5.5 million.