The battle between Equity and Safaricom  has dominated news on the Kenyan corporate scene in recent times. Equity bank's proposed introduction of thin SIM technology will threaten the dominance of Safaricom's M Pesa in the Kenyan mobile money market. Safaricom therefore, has acted to protect its forte'.

The 0.1 mm-thick SIM cards sit on top a user’s existing SIM, allowing subscribers to access voice and mobile money services from two competing operators without having to own a dual-SIM phone or have two handsets. This technology has been opposed by Safaricom which leads the mobile money  field in Kenya via its M-PESA service. Safaricom has said the technology puts users at risk of fraud and wants the bank to be prohibited from issuing the cards.

Safaricom has been successful in blocking the issuance for the cards for now. The Communications Authority of Kenya says Equity Bank must start operations using normal SIM cards until it has received expert advice on the ultra-slim technology. The regulator is awaiting the opinion of the GSMA, a global association for mobile-phone operators, before making a ruling on the issue.

[caption id="attachment_33678" align="aligncenter" width="595"] Bob Collymore, the Chief Executive of Safaricom, says the ultra-slim SIMs would compromise the security of M-PESA.[/caption]

“This is a classic incumbent move, claiming security concerns to try and prevent Equity Bank offering value-added services that Safaricom offer through M-PESA,” says Lawrence Lundy, a consultant at Frost & Sullivan. “It is unlikely that Safaricom will win the appeal. My guess is that they are delaying the inevitable whilst ramping up their marketing and product response.”

Danson Njue, an analyst at Ovum, a consulting firm, agrees with Mr Lundy, saying the slim SIM is considered to be secure. It uses a microchip embedded on a thin piece of paper that can be used to store several encryption keys to protect user information, and is already in extensive use in Asia. M1, a Singaporean operator, offers a dual-SIM solution based on ultra-thin SIM technology, while Chinese banks Wujin Rural Commercial Bank and Quanzhou City Commercial Bank have deployed mobile-banking solutions in the same manner.

According to the above analysts, the question of thin SIM technology is not a question of "if" but "when". And when that time comes, Kenyans can expect  increased competition between the two firms as they fight for the position of market leader in mobile money. This will rekindle memories of the competition between Castle Breweries and East African Breweries Limited (EABL) that played out in the late  1990s to 2002, when Castle first ventured into the Kenyan beer market.

Read the full analysis on the slim SIMS which appeared on The Economist here.