Airtel poor London’s debut linked to major missteps in Kenya
SEE ALSO :Kenya’s first green bond starts tradingThis means that while Safaricom is making Sh460 per month from each of its over 30 million subscribers, Airtel Kenya is making much less per subscriber despite giving out enticing offerings and below-market prices. “Voice ARPU has continued to gradually decline as a result of more intense price competition and growing contribution of mobile data and M-PESA to the overall revenue mix,” explains Airtel Africa in its prospectus in part. “In 2018, voice ARPU is expected to constitute 47 per cent of the overall market ARPU.” And since Safaricom has deployed more resources into data infrastructure such as 4G networks in the recent past, the gap between the two will only widen in coming days, a fact Airtel Africa acknowledges in its prospectus. “Smartphone users have steadily increased between 2016 and 2018, reaching 20.9 million in 2018 with a penetration of 40.6 per cent,” states the report in part. “Average data consumption per data-active customer has more than doubled from 328 megabytes (MB) per month in 2016 to 697MB per month in 2018. As a result data ARPU contribution has been increasing steadily due to aggressive data plans stimulating the data usage, reaching 17 per cent of total ARPU in 2018.” Airtel has also made several false steps in the field of mobile money transfer that has lead to regulatory action. In 2017, the company was granted a license through its subsidiary Airtel Money Transfer Ltd to carry out money remittance services in Kenya. The license was renewable annually but required the company to maintain a minimum core capital of Sh20 million at all times. Airtel Kenya failed to meet this threshold and the Central Bank threatened to revoke the license for the company’s “failure to commence business.” The firm’s mobile money service business also came under pressure with fraud and unpredictable regulatory intervention identified as the major challenges to operations. “In 2018, incidents of cash control frauds were identified in the Group’s Airtel Money operations in Kenya and Niger, which involved circumvention of the Group’s controls by Airtel Money staff and resulted in losses of Sh670 million and Sh67 million, respectively,” read the prospectus. Airtel Kenya says that while it has introduced controls, including segregation of duties, daily reconciliations and technical restrictions on funds transfer to non-Airtel bank accounts, the risk of fraud by internal staff cannot be eliminated completely.
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