> Posted by Nate Gonzalez, Investment Officer, Accion Venture Lab

Last week this blog shared the news that Equity Bank applied for a mobile teleco operating license in Kenya, a development suggesting the bank’s interest in entering the country’s M-Pesa dominated mobile money market. In rapid succession, this weekend Kenya’s two largest telcos, Safaricom (who operates M-Pesa) and Airtel, announced that they are jointly buying-out yuMobile, the third-biggest telco in Kenya, and the most likely player to have partnered with Equity to enable it to enter the country’s telco-led mobile finance space.

There is strong speculation among the local financial services industry that Safaricom and Airtel would rather face the devil they know (i.e., each other), than allow Equity to disrupt the mobile money paradigm in Kenya. yuMobile is Kenya’s third-largest operator after Safaricom and Airtel, which are number one and two, respectively. In this deal, Safaricom will take control of yuMobile’s infrastructure and Airtel will assume ownership of yuMobile’s customers. The competitive measure by the two telecos leaves Equity with only one potential partner in Kenya’s four player telecom market, Orange, which has roughly seven percent of the market share.

Image credit: Cherie Blair Foundation

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