alexa Why Equity’s thin sim is giving Safaricom sleepless nights   - Daily Nation

Why Equity’s thin sim is giving Safaricom sleepless nights  

Monday September 15 2014

Equity Bank chief executive James Mwangi (left) and his Safaricom counterpart Bob Collymore.

Equity Bank chief executive James Mwangi (left) and his Safaricom counterpart Bob Collymore. FILE PHOTOS |  NMG

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The approval of Equity Bank’s application to roll out telecommunication services using a new sim card technology last week is likely to kick-start a revolution in Kenya’s mobile money market that has for years been dominated by one player.

The Communications Authority of Kenya director general Francis Wangusi said the regulator had given Equity Bank the go-ahead to roll out its services using the technology for one year after which a technical review would be conducted to ascertain the card’s security.

Finserve, a subsidiary of Equity Bank which was given a Mobile Virtual Network Operator licence in May, will run the network.

The decision allows the bank, with the largest customer base in the region, to distribute the ultra-thin chip which users would overlay on their current sim cards and access two different networks using the same handset.

It is a move that sets forth a tough tussle between Equity and Safaricom, the telecoms market leader, for the control of millions of shillings transacted through phones daily.

The intensity of the ensuing fight has been clearly demonstrated in the past few months as the two corporate giants flexed muscles in a bid to influence the regulator’s position on whether or not the thin sim technology would be deployed in the country.



The two companies engaged in a battle that not only got the attention of the communications sector but also the Central Bank of Kenya and international organisations such as GSMA. Finally the battle ended up in Parliament. 

And although the matter is still before the House committee on Energy and Communications, the direction by CA that the thin sim technology can be used on trial for a year gives Equity a chance to prove if it can do what other Safaricom’s competitors have not.

For years, Kenya’s mobile money market has been dominated by Safaricom through its flagship M-Pesa brand and attempts by other players to replicate its success have largely failed.

However, Equity Bank brings a whole new dimension to the game, which is the reason its entry into the sector has unsettled Safaricom.

Firstly, with the thin sim technology, customers will not have to change their old sim cards or acquire a dual-sim handset to operate on two networks. “You will just attach the chip to your current sim card and you can operate on whichever network you choose.


“It will be similar to having a handset with dual-sim capabilities. With that, a customer will be able to perform any transaction currently done in a banking hall from their mobile phone,” Equity Bank chief executive James Mwangi told the Smart Company in an interview.

Customers that are already using the services of other existing networks will retain their current phone numbers but get a different prefix. Secondly, in the search for customers, Equity will not start from scratch like other players. Its first target is the more than 8 million customers it already provides financial services.

Mr Mwangi said the sim cards would be given to customers freely through the bank’s over 225 branches and more than 13,000 agents across the country. This means it will not be required to set up a whole new distribution chain but build on the outlets it already has.

“Our target is to have every one of our customers on our network. Once we launch, each of the 200,000 customers we serve daily will be given a sim card and shown how to use it. The customer will then make the decision on which network to use,” Mr Mwangi said.


Users will access services offered in Equity’s banking halls including account transfers, loan application and insurance services. They will receive data about the Nairobi Securities Exchange and market information on agricultural produce. Learners who register will receive a quiz daily to help them study better.

Pricing will also be a determining factor in the fight. Mr Mwangi said voice services on the network would be launched at a promotional price of Sh2 across network and later match Airtel Kenya’s Sh3 per minute rate.

Safaricom currently charges Sh3 per minute within network and Sh4 for call terminating in other networks.

Mobile money transactions on Equity’s network will be capped at Sh25. Safaricom’s charges could go up to Sh330, according to information on the company’s website.

It is for these reasons, analysts say, that the deployment of the thin sim in the country has encountered high opposition, particularly from Safaricom which has maintained that the security of its M-Pesa customers would be compromised.

The company told the communications authority in a letter to restrict Equity from launching its services on the thin sim as it would expose its customers to fraud.

“It would compromise the security of the M-Pesa system and consequently expose our 19 million M-Pesa subscribers to irreparable harm,” said chief executive Bob Collymore.


But when he announced the regulator’s decision last week, Mr Wangusi said Safaricom’s fears were baseless as the technology is already in use in other parts of the world.

“We have to rely on international standards because, you know, none of these phones and technology we use is made in Kenya. If international standard testing agencies have found that they comply, who are we to deny them?” Mr Wangusi said.

He said the authority gave the Equity the green light because it was convinced that technology is secure but noted that the bank would be stopped from using the thin sim card if there would be issues in the one-year period. The decision was made by a technical committee.

The overlay sim technology is a new concept in Kenya but certainly not new in the world. It has been widely used in more developed markets, particularly in Asian countries such as Singapore – one of the world’s renowned financial markets - and China.

Members of the Energy and Communication committee have asked that Equity holds back its roll out plan until it gives the technology a clean bill of health after investigations. 

The two other companies that were issued an MVNO licence together with Finserve have not announced when they would launch or which type of sim card they would use.