Zain, Safaricom wars go to President’s office

“We are concerned that the ministry chose to disregard our views on the selection of the lead consultant and actually proceeded to revise the regulations in complete disregard of the written views of other operators and without taking steps at consensus building,” Mr Meza says in the letter.

Information Permanent Secretary Bitange Ndemo denied Zain’s claims that the operators were never consulted over the hiring of Frontier Economics.

Essar’s Yu, another small player in the market, also said it was not comfortable with the regulations as revised and wants them reviewed afresh.

“We are very unhappy with the way the whole issue has been handled,” said Atul Chaturvedi, Essar’s country manager.

The competition laws were reviewed after Safaricom accused the government of unfairly targeting it for being successful and threatened to seek legal redress if no action was taken to review them.

The latest revision of the telecoms competition regulations has removed a number of clauses that Safaricom said were targeted at its business to the advantage of rivals Zain, Orange and Yu.

Knocked out from the rule book is the section that defined a dominant player as one whose revenues exceed 25 per cent of the total income of all licensees in a particular segment of the market.

The new rules bear no threshold on revenues or market share, meaning that even smaller players can be called to account when they engage in practices that beat the spirit of fair competition.

This means that a service provider such as Safaricom -- which has welcomed the changes -- will not be declared dominant just because it has significant market power.

The government hired Frontier Economics in June in the wake of Safaricom’s opposition to the competition rules published in May, arguing that the regulations risked reversing the gains it had made over the years.

Before the regulations were reviewed, the CCK had the powers to approve any price increases or reductions by the dominant player.

The latest review of competition rules has left the regulator with the authority to approve only the dominant player’s price increments and not reductions.