Safaricom Plc – M-Pesa - “Mobmoney No Problems” - November 2018
• M-Pesa - “Mobmoney no problems” is the 6th and final part of our 6 part series report titled “Is Safaricom losing its grip?”
• In the 1st part - “Pricing Power Explained” we explained the concept of “pricing power” which we defined as the ability of a company to raise prices over time without reducing demand for its products.
• We used the Herfindahl Hirschman Index (HHI) theoretical framework to determine the each business line’s market concentration levels and mentioned in brief the services in which Safaricom has or does not have pricing power.
• The report begins with an analysis of the mobile money subscription, transfer and payment business concentration levels concluding that the mobile money market is highly concentrated.
• We then give a brief explanation of the reasons behind M-Pesa’s market positioning with its huge agent network, multiple users and differentiated pricing amongst the reasons mentioned.
• We then conclude that M-Pesa holds pricing power and provide a timeline of historical price adjustments and market share trends.
• M-Pesa holds considerable pricing power in both money transfer and payment services but in the latter we observe a growing competitive threat especially from Equitel that could erode its pricing power in the long-term.
• Regulation is identified as a threat to M-Pesa’s market positioning and we briefly mention some proposals made by Analysys Mason to the Communications Authority (CA).
• On service revenues, we do not see a significant threat in the short and medium term and forecast M-Pesa as the biggest revenue earner for the company in the next 3-5 years. Download Report