Independent consultant UK-based Analysys Mason (AM) was contracted in 2016 by the Kenyan regulator, Communications Authority of Kenya (CA), to analyze the competitive nature of the local telecommunications market.
After collecting data, conducting a technical assessment, reviewing legislation, and meeting industry stakeholders, the firm recommended in proposed remedies. According to the report, if market analysis establishes that a market is not effectively competitive, then the last phase of the work involves developing remedies to promote competition in that market by addressing the identified market issues/failures.
Evidence of anti-competitive behavior unfavorable for the Industry
Safaricom’s standard tariffs, permanent loyalty schemes and promotions should be capable of being profitably replicated by a reasonably efficient competitor. At least five days before launching a new tariff, loyalty scheme or promotion, Safaricom should provide a justification that the proposals can be replicated by a reasonably efficient operator, for which the key parameters (market share, cost structure etc) will be defined by the Communications Authority.
This will be detrimental to Safaricom and the industry as well creating a monopolistic market hence no competition aspect between the different mobile operators.
In the past, Safaricom has threatened M-Pesa agents with loss of accreditation if they acted as agents for other mobile money providers and has arranged to remove or cover point-of-sale advertising for other providers. Airtel documented a number of examples of these practices in 2015. The report states that based on exchanges with Airtel and Telkom, that the situation has improved since then but the two operators believe that the issue has not been entirely eradicated. When asked for more recent evidence, both companies stated that it is difficult to persuade agents to provide it for fear of action by Safaricom
In the area of towers the report finds that, Safaricom is clearly dominant and that it is not economically viable for smaller operators to extend coverage in areas of low population density given current market share and cost of tower sharing.
The report recommends it should be required to provide other operators access to its sites in 14 designated counties where there is the largest disparity between the number of Safaricom sites and the number of sites deployed by the other mobile operators in Kenya.
Looking at all the data and other insights regarding Safaricom’s has secured it’s position as a market leader with well thought out strategic plans over to continue thriving in the telecoms industry in the country.
“We need to discuss how dominance by one player came about in the first place and figure out whether what is suggested is, in the long term, in the consumer’s interest. Expertise in an area is not the same thing as infallibility.” Jaindi Kisero former Nation Media Group Managing Editor for Business and Economic Affairs
He adds that, a good competition regulation regime must seek to achieve, first, high quality of services and affordable prices to consumers; and secondly, provide access to advanced services in all counties at prices comparable to what is charged in urban areas. Thirdly, it must bring access to advanced telecom services to schools, healthcare facilities and libraries.
“It seems likely to me that there is a very real risk of Safaricom’s competitors being pushed out of the market – potentially to the detriment of consumers and businesses by being the only commercially viable mobile network in Kenya.” Moses Kemibaro is the Founder of Dotsavvy.
Going forward, what remains to be seen is whether or not the Communications Authority will proceed with any of the remedies proposed in the Analysys Mason Kenya market study report.
