A draft report by the Communications Authority of Kenya (CA) on increasing competition in the telecommunications sector proposes that Safaricom, the largest telco in Kenya, should provide its competitors with access to its transmission sites and mobile money agent network.
The proposal could become a new regulation guiding the telecom sector if the draft report is implemented. According to Reuters, the CA is currently finalising the regulatory report.
Anti-Safaricom Proposals
In an attempt to end Safaricom’s dominance in the telecommunication sector, the CA has made proposals that could potentially damage the operator’s business.
An earlier report leaked in February last year proposed splitting Safaricom’s mobile money business, which has a wide customer base, from its voice and data business.
In response, Safaricom intensely campaigned against the proposal resulting in its removal. However, other proposals that Safaricom terms as threatening to its business have been retained in the current draft report.
The draft report wants Safaricom to provide its competitors with access to transmission sites in selected areas where they have inadequate coverage. In addition, it wants Safaricom to offer its competitors access to its mobile money agent network.
Safaricom has over 26 million M-Pesa customers, making its mobile money platform the most popular and most profitable in the country. Therefore, the proposal requiring Safaricom to share its mobile money agent network is highly threatening as it could expose the operator to increased competition.
Michael Joseph, the former chief executive of Safaricom and a current member of the board said the CA’s proposals are “not the right way to go.”
“We do not deny that we are strong but we are strong because we have made the necessary investments to be strong and it would be unfair to criticise us or restrict us because we have made these investments,” he said.
Mr Joseph said Safaricom’s competitors have failed to invest in an agent network. “They want this agent network to be handed to them on a plate,” he said.
Safaricom has also condemned the proposals to control voice and data prices.
The Competitors
Safaricom’s competitors, Telkom Kenya, owned by UK-based investment firm Helios and Bharti Airtel, are going to benefit greatly from the Authority’s proposals if they are implemented. The two operators have been struggling over the years unable to keep up with the telco giant Safaricom. In addition, the proposals will be welcomed by the two rivals who have long wanted Safaricom’s dominance in the sector to be controlled.
Still, rather than waiting for the regulator to save their drowning businesses, Telkom and Airtel are allegedly considering a merger that could help them compete more favourably with Safaricom.
According to Christopher Wambua, the CA’s acting head of public affairs, the regulator will take into consideration the views of all operators, including Safaricom, before the draft report is published and implemented.
