Leading telecoms company, Telkom has diversified into South Africa’s financial services industry specifically in the insurance domain. The telecom service provider will commence operations by selling policies on funeral insurance.
“In recent years Telkom has made a strategic shift to digital distribution, which puts it in an ideal position to distribute insurance products using its considerable digital structure and intellectual property,” Sibusiso Ngwenya, Managing Executive for Telkom Financial Services stated in a joint statement on Sunday with insurer, Guardrisk.
Telkom and other mobile operators (MTN-MoMo, Econet-EcoCash, and M-Pesa amongst others) in South Africa hope to expand their services to over 11 million South African who are financially excluded.
Financial analysts believe that growing interest in mobile-money is a threat to traditional and digital banks.
Telkom, which is partly owned by the South African government, over the years has diversified its income stream outside its line of business, which now contributes over 20% to the group’s revenue, up from 56% in 2013.
Recently, the company disclosed that it would also offer services in business loans and launch a digital wallet platform for customers to purchase products and pay for services via its Yep! application as well as other online transacting software.
Over the years, the mobile money service in SA has become more competitive as telecom providers are leveraging their existing customer base to expand their services.
Nevertheless, the population of the sub-Saharan country is estimated at 59,379,678 and holds a growing rate of 1.4 percent annually, which indicates a possible profitable market share for investors.
Last month, Vodacom announced its plan to create mobile money and the financial application called ‘’Super app’’ in partnership with digital payment provider Alipay, which is under China’s Alibaba conglomerate.