In 2014, Kenya opened up the market by legislation to Mobile Virtual Network Operators (MVNOs), basically meaning a mobile carrier can come in and lease infrastructure and go straight into business. Five companies applied for the MNVO license with the Communication Authority of Kenya and were awarded. They included Zioncell, Equitel, Kenya Airways, Tangaza Money and Nakumatt.
Equity Bank ventured into the mobile money transfer space with the registration of mobile virtual network operator Finserve Africa Limited that runs Equitel. The bank’s entry into the space was marred with legal hurdles. First, Equity planned to introduce its product to the market using thin-SIM technology, whereby a special SIM card, overlays that provided by the competitors or currently in use on a subscriber’s handset. Equity was sued with claims that such a SIM card exposes users to privacy issues. The other legal hurdle emanated from trademark issues with regards to the Equitel name, which we believe were sorted in an out-of-court settlement.
The other legal hurdle was a case filed by Consumers Federation of Kenya (COFEK) alleging that the Communications Authority of Kenya (CA) did not follow the right procedures in awarding the MNVO licences. COFEK further stated that CA allocated licences in an opaque manner without public consultations or public tendering. COFEK further claimed that CA violated the law by failing to give a 30-day notice in the Kenya Gazette before issuing licences. A judge has since thrown out the case on the grounds that the allegations lacked enough evidence.
In a recently released report by the Communications Authority of Kenya on the state of the ICT sector, Equitel registered 24.3% growth in subscribers to 1,085,869 all on pre-paid tariffs.