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Telkom protests new mobile licences

   From left: Mobile Pay Ltd director Gichane Muraguri, chairman and CEO Oscar Ikinu and programmes manager Wahome Githumbi show off the Tangaza sim cards during the licensing of mobile virtual network operators. Photo/Diana Ngila
From left: Mobile Pay Ltd director Gichane Muraguri, chairman and CEO Oscar Ikinu and programmes manager Wahome Githumbi show off the Tangaza sim cards during the licensing of mobile virtual network operators. Photo/Diana Ngila 

Telkom Kenya has written to the Communications Authority of Kenya (CAK) seeking to know why the agency licensed three Mobile Virtual Network Operators (MVNOs) in the absence of contractual guidelines. Telkom says the licensees pose unfair competition to operators.

Mickael Ghossein told the Business Daily that lack of rules of engagement and parameters on how the four mobile operators should do the new business has made it difficult to strike deals with the parties that have approached them.

Mr Ghossein said the vacuum may cause inequitable distribution of the said partnerships and market concentration of the MVNOs in a single operator.

A major concern for Mr Ghossein, who sometime back said he would not enter into such partnerships, is that the MVNOs are only charged Sh100,000 as licence fee yet they will offer all services, including voice, data, mobile money transfer services and Short Messaging Services (SMS), automatically making them serious competitors yet they will not have invested as much as the telcos.

“The authority ought to consider the cost of investment put by the existing players and the possibility that MVNOs having not invested as much may engage in competitive practices that would lead to market dumping and lead to fresh price wars,” Mr Ghossein said.

Telkom is demanding to know what measurers the regulator has put in place to protect the investments of existing operators.

“We are not opposed to the MVNOs. However we have written to the regulator seeking clarification on specific issues such as the lack of framework that guide the operators and the MVNOs when entering into contracts,” said Mr Ghossein.

Francis Wangusi, the CAK director-general, said the authority is working on the policy guidelines and will release them before June.

Three firms issued with the MVNO licenses on Friday are Finserve Africa Ltd, a subsidiary of Equity Bank; Mobile Pay Ltd, owned by Tangaza Money; and Zioncell Kenya.

They will ride on existing operators’ networks at a negotiated fee, saving them the pain of heavy capital expenditure associated with rolling out telecommunication networks. The regulator says this will promote competition.

The firms have entered into contract with Airtel to use its infrastructure and are expected to rollout their services as soon as they are offered prefixes by CAK, meaning consumers will have to buy their SIM cards to use the services.

“The MVNOs will be assigned their own numbering range where they will request and provide services as bona fide entities,” Mr Wangusi said.

This means they will operate independently and compete with the host network provider in the services they offer.

“The MVNO license has been issued under the Application Service Provider (ASP) category to provide all forms of services to end-users using the communications infrastructure of a licensee under Tier I category (the four mobile operators),” Mr Wangusi said.

However Mr Ghossein said this amounted to licensing three other mobile network operators under the guise of MVNOs.

Telkom Kenya asked the regulator to measure the impact on the sector.

“Considering the state of play in the industry, we are of the view that the licensing of such players (MVNOs) will only serve to destabilise the already fragile market,” Mr Ghossein said.

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