East Africa’s first MVNO; Why Operators in the region should Care?

A mobile virtual network operator (MVNO) is a company that provides mobile phone service but does not have its own licensed frequency allocation of radio spectrum, nor does it necessarily have the entire infrastructure required to provide mobile telephone service.

 The idea of MVNO – that is, operators that don’t own their own communication infrastructure – has been in existence in other parts of the world for more than 10 years. http://www.standardmedia.co.ke/?articleID=2000109992&story_title=Opinion%3A+MVNOs+will+make+the+mobile+sector+more+vibrant&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+PopularStandardDigitalNewsFeeds+(Popular+Standard+Digital+News+Feeds)

 The recent news on Equity Banks acquisition of a telecoms license, along with two other licensees has gotten the Kenyan market excited. I can’t help but get goose bumps at the idea.

 For starters its going to be the first MVNO launch in East Africa, and more importantly its led by a bank. Although in the traditional sense, Equity is among few banks in Kenya that does not operate like a bank. They truly understand their market and customer base. They came into their own, by redefining banking for the Kenyan market. Where it was the preserve of the few elites, Equity didn’t care what you did for a living to get you to open an account. If you were farmer, mechanic, shopkeeper, you are more than welcome to come in your gumboots. Lately they don’t even need you to come into the bank to acquire an account, just dial *247# and set up your own account

 We in the m-commerce space have witnessed the simmering discontent with Safaricom by Equity, especially in the wake of their failed marriage M-Kesho. At which I would presume Safaricom smiled all the way to the bank, daring Equity to do what they would. And they have( to which they say, get rid of the middle man)

 Equity’s story has always been one of triumph, first taking on the banking fraternity with their polished looks and elitist banking, to become the largest bank in East Africa, by virtue of customer numbers, and now taking on the largest operator in the region. It’s a rags- to- riches story that has put it firmly at the top to win the banking pie. I can’t help but root for them

 To put it into perspective for my Zim readers, Equity has more customers than Econet wireless. So you may be asking, what’s an MVNO anyhow, and how does it affect the price of cocoa in Ghana?  It would be akin to CABS  going head to head to launch it’s own network.

 What do MVNOs offer?

MVNOs normally try to leverage on one of the three strategic assets – Brand, Distribution or Existing Customer Base. The existing customer base can be non-mobile customer base that can be cross-leveraged for mobile services.

The partnership with Airtel is great; it helps Airtel utilize the excess capacity, with Equity riding on its expansive network. Airtel has failed to unseat customers from Safaricom, this just might be they thing to grow their revenues. This partnership is hugely valuable for Airtel because they can tap into a value pool that sits in a different market in order to increase the attractiveness of their services.

 Equity is targeting the retail payments space for which cash constitutes 70% of all payments and will be seeking to issue its own branded SIM- Cards. Their roll-out strategy and plan is well thought out, with an incredibly experienced team.

 Why do I have goose bumps you ask? Because not too long ago,I had this very conversation on what an MVNO could do for the Zimbabwe telecoms market. An agile player, unencumbered by the regulatory framework, the bureaucracy of operators, and with a keen ear on what customers want.

 Operators have much to learn from other businesses. Contrary to what operators believe, they don’t have all the answers. Other organisations often know a lot more than operators about mobile subscribers’ habits, and this is extremely valuable. Revenue growth will also increasingly come from products and services not in an operator’s core service portfolio.

 

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