It is not a secret that Equitel has been doing really well when it comes to mobile money. Since its inception in July 2015, as A Mobile Virtual Network Operator (MVNO), the brand has been growing steadily. The service was also named the best mobile banking platform in the 2016 Banking awards.
A little class work, an MVNO is a wireless communications service provider that does not own the wireless network infrastructure over which it provides its services. Equitel rides on Airtel’s infrastructure, meaning if you’re an Equitel subscriber, you’re using Airtel’s network to get your services.
Equity Bank planned to use Equitel as a tool to foster convergence between mobile money and banking. The bank issued its customers with SIM cards taking advantage of Kenya’s large mobile penetration which allowed the bank to scale its service faster.
In July 2016, we highlighted that Equitel was planning to expand into other countries in the region, including Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of Congo.
Equitel has grown from just offering mobile money services, which by the way, accounts for 227.4 million transactions that Equity Bank saw in 2016 alone. The service had plans to offer smartphone loans to customers through a partnership with Alcatel and Samsung.
During their Financials announcement yesterday, James Mwangi, Equity Bank’s CEO, was very proud to announce that Equitel was steadily gaining in the mobile money market share against Safaricom’s M-Pesa. The CEO revealed in a presentation that Equitel’s market share stood at 16% against Safaricom’s 81.7% in 2016, which was a 2.9% growth while Safaricom lost 3.1% market share.
Speaking to Techweez, Jack Ngare, Finserve’s Managing Director (an Equity Group Holdings subsidiary that runs Equitel), revealed to us that they were in the plans of aggressively exploring Equitel as a serious business in the mobile service provider space. Previously, James Mwangi has said that they would let Equitel grow organically, and they were not keen on the telco business but how it fits in to reach their customers better.
The strategy seems to have changed now. The new direction is to target customers more with new value adds like financing for smartphones and leverage on the resulting data consumption. The gains are twofold; a new loans revenue stream for Equity bank by financing smartphone purchase through phone contracts and second is get high value users who they can sell more of their products to, such as mobile data and banking products.
Phone contracts would enable customers to buy high-end expensive phones at a little or no deposit (we’re not sure of the specifics yet). This in turn will get Equitel high value customers on their platform, which will eventually translate to more airtime and data usage on the platform.
The general idea Equitel has is to strategically target customers they can sell new products to. Phone contracts is one of them, which aim is to turn revenues from Equitel as a carrier and leverage the bank to give it an edge in revenue opportunities. We are not sure how well the phone contracts idea will work, seeing Safaricom had initially started such a service but later gave up on it.