A report from the World Bank has flagged Kenya’s telecommunications sector as one of the country’s fastest-growing industries, but also one of its most structurally outdated, with rules that no longer match the scale, complexity or economic weight of the market.
- •The Bank’s review points to gaps in infrastructure sharing, spectrum allocation, and digital-market oversight that increasingly favour incumbent firms like Safaricom and Airtel
- •These shortcomings drive up costs for smaller operators and consumers alike, while discouraging new investment that could expand coverage and improve services.
- •The report’s first concern is the infrastructure-sharing regime, barely changed since 2010 which allows operators to share towers, ducts and fibre, but relies on informal negotiation with little regulatory pressure.
The Bretton-Woods Institution notes that firms with large networks can quietly delay or refuse access, forcing smaller competitors to build duplicate towers rather than use what already exists. The result is an industry that burns money on redundant steel instead of extending cheaper, broader coverage.
Despite the growing demand for high-speed mobile broadband, Kenya still distributes frequencies on a first-come, first-served basis. According to the World Bank’s assessment, this gives incumbents an automatic advantage and leaves newcomers unsure how decisions are made. Because no active secondary market exists, spectrum often stays with original holders long after better uses emerge, leading to inefficient and uneven access across the sector.
“By contrast, switching from administrative allocation to competitive auctions when demand exceeds supply could ensure that spectrum is allocated to the players able to use it most productively and valuably,” the World Bank said.
The report highlighted countries such as Nigeria, Colombia and Myanmar as best case examples of countries that have shifted to independent tower companies by divesting operator-owned masts, lowering costs, and improving service quality as infrastructure became openly shareable. Kenya’s telco towers are still controlled mainly by the giant operators, and have never fully delivered the same competitive or cost benefits.
Moreover, Kenya has yet to implement mobile termination rates that reflect actual costs or promote competition, leaving smaller operators at a disadvantage. These fees, charged when a customer calls someone on another network, disproportionately burden networks with fewer subscribers, while larger operators benefit from a “club effect.”
The ‘club effect’ occurs when larger mobile operators gain an advantage because they receive more termination fees than they pay, while smaller operators pay proportionally more, reinforcing market dominance.”
Regulators have capped the rate at 0.41 shillings per minute, well above cost and higher than in peers such as Tanzania and Ghana. The impact is particularly felt by the poorest Kenyans: half of the bottom 40% own only basic phones, and for them, daily use of voice calls outpaces internet use by more than four times.
The report recommends stronger infrastructure-sharing rules that would require fair access, clearer pricing and faster dispute resolution. It also proposes a modern spectrum framework would shift toward transparent auctions when demand outpaces supply.
This can be determined by updated market studies that would allow regulators to identify firms with significant power and impose targeted measures including fairer mobile-termination rates that especially affect low-income users.
