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Airtel threatens Kenya exit over Safaricom ‘dominance’

Telecommunications firm Airtel could exit the Kenyan market if new regulations are not passed to curb Safaricom’s dominance, its chief executive Adil El Youssefi said on Tuesday.

Mr Youssefi said “anti-competitive behaviour” by the market leader had condemned competitors to losses, claiming that it also contributed to the exit by Essar — Yu network operator — as well as the expected pull out by France Telecom from Telkom Kenya.

“We have been trying for over five years and have not made one dollar in profit. Airtel is likely to exit Kenya if the market structure is not addressed in terms of dominance,” said Mr Youssefi after launching a promotional offer for Airtel subscribers.

“The shareholders of Airtel at some point will say: ‘Thank you, Kenya, we are no longer investing here’.”

The Communications Authority of Kenya (CA) earlier said it would need at least one-and-a-half years to conduct a study to determine the thresholds that determine abuse of dominance in the telecommunications industry.

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It is only after the study that new laws can then be enacted to address any anti-competitive practices in the market.

Mr Youssefi also took issue with a recent notice by the industry regulator indicating that Safaricom will be given a licence to roll out high-speed (4G) Internet countrywide.

The notice was published on August 19 and gives stakeholders a month to submit their objections, if any. Mr Youssefi said giving Safaricom the 4G permit ahead of other telcos would “tie” consumers to one service provider.

“We do not agree with the way the valuable 800HZ spectrum was allocated to the dominant player to deploy the 4G network without a clear agreement with other players on commercial terms,” he said.

“If the dominant player launches the 4G network across the country, consumers will not have a choice and will be limited to only one provider.”

The CA has stated that Safaricom’s 4G licence will be issued on condition that it is shared with other operators.

In an earlier interview with the Business Daily, the CA indicated that 30 per cent of Safaricom’s 4G spectrum would be shared with other telcos. Safaricom has also indicated that it is willing to share with its rivals the 4G spectrum on commercial terms.

“We have tried to talk to the dominant player (Safaricom) about the commercial modalities, but they are not interested. I do not trust them even one second. They will not allow us to use the 30 per cent spectrum diligently. The technology allows everyone to control their quality of services.

“The CA should ensure that this valuable spectrum is not used commercially until we come into an agreement. If not, we go,” said Mr Youssefi.

The Airtel boss, whose company is second to Safaricom in terms of customer numbers and market share, said “very high barriers” had prevented customers from switching from Safaricom to rival networks.

In five years, Mr Youssefi said, Airtel had lost over Sh50 billion in the Kenyan market.

“We have very high barriers to switching networks in the telecoms. People cannot switch because of the size of the dominant player. If you add another barrier to switch, which is 4G, competition will be less effective and will further cement monopoly of the dominant player,” he said.

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