If you ask most of the proponents of ‘Telco led’ Mobile Money (Telcom operators having Mobile Money licenses) why they want the telecom operators in the Mobile Money game, their reason basically revolves around “it worked in 1Kenya”.

To be fair, that is a good argument. It is not a bad idea to try something that has worked before you start experimenting with something new.

However, what if there are anticipated 2downsides? Do you still move ahead?

Anyway, here are my simplistic reasons for opposing telco-led mobile money;

  1. They have not delivered on their primary responsibility of providing good voice and data services. Why give them more?
  2. They have refused to utilise what they have in the payment ecosystem. Telco billing.

There is no need to expand on point number one. They should swallow what is in their mouths first before looking for more to consume.

The second point is what is more interesting.

Money is entirely useless except it is spent. Quite a number of people transferring money do so because they, or someone else wants to buy something immediately.  Why don’t the telcos double down on the “I want to pay for something” segment of those that may use mobile money?

BlackBerry has already shown that telco billing is very possible at scale and can be rather seamless in using prepaid calling cards to pay for services. So why have prepaid third party services on telcos not grown beyond BIS, caller tunes and those spammy SMSs?


I am not sure about the Blackberry BIS revenue structure. However, telcos take between 45 -80% (yes 80%!) commission on stuff distributed and billed through them. Compare that to Apple’s albeit greedy 30% and Interswitch’s 1.5%.

As a result of greed induced friction, only an infinitely small range of products can commercially viably, be distributed via telcos. The math just can’t work when someone takes a commission of 80%!

Of course it is known that when you pay N100 for airtime, not all of it goes to the telco because of distribution costs and commission. However, about 90% does. Therefore, telcos can afford to give at 70 – 75% to the content/service providers vs. the 20%-55% they currently give.

Of course, a telco taking 30% off the top is still massive for a lot of businesses with lower profit margins, but there is a way out.

Postpaid subscribers.

Telcos in all probability take 100% of the money paid by postpaid subscribers as there is no distribution cost to the payment, so they can afford to give 90 -95% back to service/content providers for these category of subscribers.

Who knows? Ability to pay for services cheaply may even convert a lot of prepaid subscribers to postpaid.

So, anytime a pro telco-led Mobile Money person is around you, ask them “what they you done with what you have?”

For the record, I am in support of independent led mobile money implementation, ala Paga. Banks and Telcos should stay as unbiased infrastructure providers.



Some may ask, what about the free market? Let the market decide.

I am sorry to break it to you, free market economics does not exist in real life. Besides, the 4 telcos already have a monopoly position protected by the limited number of licenses available to provide telecom services.

How’s that for a free market?


1 Like I argued in my previous post, Kenya is a single data point with different circumstances so there’s no harm trying another way

2What downside is there to telco led mobile money? Telcos have an unfair monopoly advantage due to the fact they provide the infrastructure on which Mobile Money runs. Those who own the road/tollgate cannot be allowed to provide transportation services.


Thanks to Tija and Osahon for helping me spot a dozen typos and errors.

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5 thoughts on “Why I Oppose Telco Led Mobile Money

  1. I have since refused to be drawn into any discussion on this topic by you as you had a front row seat but declined. One simple question is this. If the telcos have failed, how did you get the internet to post this? You have a personal VSAT link at home now?

    I will write a post shortly on “alternative African mobile money hypothesis” that explains the real dynamics at play from witnessing operations in 12 countries and not emotional anecdotes.

    1. It is important multiple sides discuss and are heard. People like you that have implementation experience, product people like me, policy people, vested interests, etc.

      There is no ‘right’ until we get it right.

      The telcos have given me so much heartache. We know how many modems you have. Actually, we do not know . BTW, why don’t they execute on what they have?

      Oo Nwoye

  2. Honestly, I don’t know why everybody wants mobile money to work in Nigeria, at-least the Kenya version of mobile money. I don’t think we have the market for it to work, I have been saying it for the past 5 years and they are still at it; some have even start selling the numbers of forced signup they got through the banks and their partners. I know a lot of people across all spectrums, yet to come across a user of mobile money, on the contrary there are loads of users of mobile banking.

    Sadly, I am with Oo on this one, I would rather they focus on their core, and do it very well, so that I can enjoy both data and voice. There is still a lot for them to do. However, if any of the players could have had a chance it would have been the telecos; they have both the financial capability and the infrastructure to play it out at scale.

    Historically, policy and regulatory driven businesses stifle innovation in Nigeria. Businesses end up being limited to just do the basic the draconian rules allows them to do, and we know what happens when you can only address a process without a room for flexibility and evolution.

  3. Oonwoye in reply to your very simplistic opposition statement:

    1) QOS has absolutely NOTHING to do with creating a market for mobile money. The Telcos may not exactly have created stellar voice services that is in Sprint (US) terminology as clear as hearing a pin drop or data services that are as fast as the speed of light but one thing is for sure. They have created one of the world’s biggest mobile industries (100 million lines) in record breaking time (10 years or so).

    2) When it comes to regulation the common Nigerian has suffered from bad actors from the usual suspects. Laissez-faire on telco QOS and a great wall of china when it comes to the telcos expanding services beyond voice and data to the payments realm. Who are the ones creating this mess? The telco dudes at Falomo, Banana Island and Adeola Odeku or the thick suits at Abuja?

    Regarding the Kenya mobile money story I would suggest you analyze the actions of their regulator and how they were instrumental in allowing a service that started out as an non-profit idea (DFID) to be nourished literally in the belly of the Safaricom beast by a highly supportive CEO (Michael Joseph) before it became the success that it become.

    1. Franklin, thanks for your comment.

      I never said QoS of data and voice was responsible for adoption of mobile money.
      I agree with you that regulators have a huge responsibility of ensuring high QoS.
      The crux of my opposition which I inadvertently buried in the post are.
      1. I oppose monopoly infrastructure providers ‘competing’ in service provision on their infrastructure.
      2. They even have an alternative (telco billing) which they have not used yet.
      Oo Nwoye

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