Kenya Airways signs MVNO agreement with Airtel

Kenya Airways and Bharti Airtel reached a mobile virtual network operator (MVNO) agreement that should eventually see the airline offer mobile services to its customers.

In a joint statement, the two companies said they have signed a memorandum of understanding on the use of the Airtel Kenya network, although the agreement is subject to regulatory approval and the issue of an MVNO licence.

As things stand, the two companies have agreed that Kenya Airways will take over customer registration, the issuing of SIM cards, billing and customer care, with further details to be revealed at a later date. The MVNO proposal has already been submitted to the Communication Authority of Kenya (CAK).

Kenya Airways said it decided to establish an MVNO in order to add new sources of revenue and also to enhance customer loyalty.

"Through this partnership with Airtel, we are optimistic that our guests will soon be enjoying a service that allows them better calling rates while in Kenya or roaming within the wide Airtel network," said Dr Titus Naikuni, managing director of Kenya Airways.

The airline said it would make use of its existing sales channels to sell the mobile services. Airtel added that the MVNO would make use of unused spectrum on its mobile network.

MVNOs are a relatively new concept on the Kenyan market. In April, CAK issued MVNO licences to Finserve Africa, a subsidiary of Equity Bank, Zioncell Kenya and Tangaza's Mobile Pay, with the three companies agreeing to use Airtel's network.

Airtel has been supportive of companies that want to enter the mobile market as it sees this as a way to offer a broader range of services to Kenyan consumers. Under its MVNO deal with Airtel, for example, Equity Bank plans to offer a full range of banking services.

At the time of the Equity Bank announcement in May, Airtel Kenya CEO Adil Youssefi said the launch of MVNOs is in line with the operator's strategy to offer differentiated services to consumers.

"We believe that the entry of the MVNOs into the market will stimulate and sustain overall market growth through a new range of innovative products and service propositions that will give more choice and value to Kenyans," said Youssefi.

He also commented that MVNOs would increase the uptake of mobile services in key segments such as mobile commerce and data, "thereby accelerating the inclusion of all Kenyans into the mobile revolution for sustained economic development of the country."

Nevertheless, the arrival of the various MVNO models has been contentious: Safaricom, which operates the M-Pesa mobile banking service in Kenya, has already criticised the Equity Bank plan to issue SIM cards, citing potential security risks, according to local reports.

Furthermore, the Consumers Federation of Kenya (COFEK) has gone to court in an effort to revoke the three MVNO licences that were awarded in April. According to an article on HumanIPO, COFEK said the process to award the MVNOs was not lawful as there was no stakeholder and public consultation.

For more:
- see this Airtel release
- see this MVNO Dynamics article
- see this HumanIPO article

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