Telkom Kenya makes a U-turn on Mobile Money Platform T-Kash

By Steve Umidha

Mobile operator, Telkom Kenya on Friday made an unexpected announcement with new tariffs on its mobile money platform, T-Kash, barely months after the third-largest mobile operator in the country last year shut down 24,946 of its existing 28,106 T-Kash agents.

T-Kash was launched in March 2018 following a revamp of Telkom Money, after the operator said it was scaling down its mobile money agent network following an evaluation of its ‘business in the face of several challenges.’

In a statement last week, the operator said that all Person-to-Person transactions below Sh 100 in its reviewed mobile money tariffs will remain zero-rated, while daily T-Kash limit per transaction would remain at Sh150, 000, and daily sending limit being retained at Sh300, 000.

On the other hand, any transactions between Sh50, 000 up to Sh300, 000 will now attract a standard rate of Sh100.

“Comparative to Telkom’s pre-pandemic tariffs, the T-K tariffs within the “send to registered off-net” category, in the following three transaction bands have been reduced: The Sh 101-500, Sh 501-1,000 and Sh1, 501-2,500 transaction bands,” reads part of the statement.

The tariffs including those of rival firms had been waived last year with the view of encouraging the use of mobile money and other forms of cashless payments, thereby minimizing the use of physical cash in light of the pandemic.

The government last year announced such measures to curb COVID-19 spread by encouraging the use of mobile money payments. As a result, this saw mobile money service providers remove charges on transactions that are less than $ 9.3 to cushion low-income consumers.

Transaction fees on payment of bills and transferring cash to bank accounts were also eliminated to discourage the use of banknotes, giving a huge boost to mobile money transactions amid the pandemic.

However, the announcement by Telkom which experienced a 30 per cent drop in mobile money subscribers from 27,837 to 19,607 as of April last year according to figures by Communications Authority (CA), caught many by surprise owing to the challenges the telco has been facing.

Prior to suspending its services to rebrand, Telkom Money was the third-largest mobile money service. With 3.6 million subscribers they transacted Sh4.3 billion during its peak in the second quarter of the 2015-16 financial year.

But since then the company has blown hot and cold on its several expansion bids which had been compounded by Treasury derailing its merger deal with Airtel.

In August last year, Telkom Kenya and Airtel pulled out from merger plans citing challenges in regulatory approvals. Telkom cited “challenges experienced in getting all the approvals required to complete the transaction,” a deal that was first announced on February 8, 2019.

The merger halt between the two rival operators collapsed after Parliament warned the National Treasury against approving the deal.

“Telkom is a classic example of what should not happen in a civilized society because the company has been the subject of dubious changes in shareholding. In the merger with Airtel, parliament opposed it in totality and in our report we told Treasury not to approve the transaction,’ said Moitalel ole Kenta, Narok North Member of Parliament who chaired a committee that investigated the proposed merger.

The deal had received the greenlight from the Communications Authority (CA) albeit with conditions, among them retaining all workers within two years and refraining from selling the firm for at least five years. The Competitions Authority of Kenya (CAK) had also approved the deal.

The two companies had hoped that the designed merger of their mobile, enterprise and carrier businesses would create what was to be a formidable company known as Airtel-Telkom to compete with Safaricom. The deal was to close in December 2019.

The renewed push by Telkom is expected to give Safaricom a run for its money particularly on calls and data where Safaricom subscribers are charged slightly higher compared to Airtel and Telkom customers

“Telkom is embarking on a journey to enhance its digital financial services offering, T-kash, over the coming weeks, to make it more reflective of current customer demands, with respect to increased security, simplicity, availability and reliability,” said its Chief executive Mugo Kibati.

Safaricom lost further percentage points of subscriber market share in the period to the end of June 2020, its seventh straight quarterly fall, according to CA data for the fourth quarter report for the financial year 2019/20.

Safaricom’s market share stood at 71.9 percent as of September 2017 when the losing streak started.

The company began to lose market share after opposition leader Raila Odinga called for consumers to boycott the brand during the heated political year, accusing it of playing a role in an August 2017 presidential vote whose outcome he successfully challenged in court.

Also felt to have hit Safaricom – which is still the dominant player in the market is Airtel’s aggressive advertisements strategies in the last three years geared towards attracting customers to the network.