In Summary
  • In a telephone interview, CCK director general Francis Wangusi admitted receiving Equity Bank’s application, saying the regulator was assessing it.
  • An industry expert who spoke to Smart Company on condition of anonymity said Equity Bank was likely to focus on providing its customers with mobile payment and banking services.
  • Equity was to start by issuing out five million MasterCard-branded cards to its customers, agents and merchants.

In a move likely to upset the apple­cart in the telecom sector, Equity Bank has applied for a licence to operate a mobile telephone business.  

Kenya’s largest bank in customer base has submitted an application to the Communications Commission of Kenya (CCK) for a licence to become a Mobile Virtual Network Operator (MVNO).

This means the company will not operate its own network but will ride on the infrastructure of an existing Mobile Network Operator (MNO) to roll out mobile telephone services.

In a telephone interview, CCK director general Francis Wangusi admitted receiving Equity Bank’s application, saying the regulator was assessing it.

“The Equity Bank licence application is not yet approved. It still has to go through several stages which are required by law,” Mr Wangusi told Smart Company.

He added that the application has been forwarded to the National Intelligence Service (NIS) for security evaluation before it is remitted to a CCK committee that will decide whether to grant Equity an MVNO licence.

Four more firms have also applied for similar licences, although Mr Wangusi could not, at the time, reveal their identities.

By the time Smart Company went to press, Equity Bank Group had not responded to calls and emails for comment on this story.

However, yuMobile’s managing director Madhur Taneja admitted that his company was in talks with the bank and hoped to clinch a deal to share infrastructure  if Equity is granted a licence.

“We are in discussion with them as they are partners but I cannot comment on any developments in progress,” said Mr Taneja in a text message.

In such a deal, yuMobile would benefit by renting Equity Bank’s surplus or unused resources on its network.

On the other hand, Equity Bank would perhaps roll out branded SIM cards. In keeping with the Banking Act requirements, however, approval by the Central Bank of Kenya is needed before operations are rolled out.

At the moment, Equity Bank has more than 8 million customers. If they all join the bank’s mobile services, this would push it to the second position in Kenya’s mobile telephone business after Safaricom, which has about 21 million subscribers.

An industry expert who spoke to Smart Company on condition of anonymity said Equity Bank was likely to focus on providing its customers with mobile payment and banking services.

Although Equity is already doing this through partnership with telecom firms, independence would see the bank gain greater control of these services and the market.

“Equity feels that it needs the SIM cards in order to win the mobile banking and electronic payments battle,” noted the industry expert.

Gaining MVNO status would actualise a long-held but rarely articulated goal of Equity’s management.

Equity is the most affected bank by the advent of mobile money in Kenya.

Safaricom’s M-Pesa, the first mobile money service in the local market, targeted the under-served and unbanked population that had been the key driver of Equity’s exponential growth.

Efforts by the bank to partner with telcos to enter mobile banking and electronic payments have not met expectations and the bank has admitted to its frustrations.

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