Safaricom yesterday defended itself once again against accusations by its rival Airtel Networks Kenya that it is abusing its market dominance.
Industry data from the CA shows that Safaricom held 64 percent share of the local market, more than double Airtel’s 27 percent share, as at the year ended June.
Airtel’s petition to Parliament shows that it has been allocated 50 MHz of the spectrum compared to 82.5 MHz for Safaricom and 37.5 MHz for Telkom Kenya.
Safaricom #ticker:SCOM Tuesday defended itself once again against accusations by its rival Airtel Networks Kenya that it is abusing its market dominance and stifling competition in the telecommunications industry.
The country’s leading telco told the Senate Standing Committee on Information and Technology that competition is healthy and that any player can build its market share through increased investments and innovation.
Safaricom’s submission comes days after Airtel told the same committee that local regulators have been reluctant to declare the rival firm a dominant player despite its having a market share of more than 50 percent, a threshold that has triggered such designations in other markets.
The Competition Authority of Kenya (CAK) and the Communications Authority of Kenya (CA) have said that Safaricom’s market share has declined in recent years and that competition remains healthy, a position the telco reiterated before the Senate committee.
“Safaricom does not have any market power and therefore Safaricom cannot act independently of other players and consumers,” the firm’s chief executive, Peter Ndegwa, said.
“It is our position that there should be no adverse regulatory actions that would stifle the growth of the industry. There is room for great investment in the industry and we look forward to seeing additional investment by other players into the market.”
Airtel has argued that declaring Safaricom a dominant player is the first step to addressing the perceived uneven operating environment.
The second-largest telco also blamed the CA for what it considers skewed allocation of mobile spectrum in favour of Safaricom and failure to reduce the fees that mobile phone operators charge each other for interconnecting calls.
“There has been no dispute as to the status of Safaricom as regards its dominance status and significant market power. However, there has been reluctance in declaring Safaricom dominant in the retail mobile market and the retail mobile money market,” Airtel said in its submission.
Industry data from the CA shows that Safaricom held 64 percent share of the local market, more than double Airtel’s 27 percent share, as at the year ended June. Telkom Kenya holds seven percent of the market.
Airtel has cited eight African nations where operators had been declared market-dominant with even lower thresholds than Safaricom’s.
These include Burkina Faso that declared Airtel and Telmob dominant with shares of 39.24 percent and 38.36 percent respectively of the market. Congo Brazzaville declared MTN and Airtel dominant with 40 percent and 38 percent shares of the market while in Nigeria, MTN was declared dominant with a market share of 44 percent.
“Declaring Safaricom dominant is the first step to ensuring market competitiveness which we believe has been the sticking point and key barrier in taking any steps to rectify any market anomalies in Kenya,” Airtel said in its submissions to the Senate.
“A notion has been perpetuated that declaring Safaricom a dominant player is punishing success, which in our view is blatantly myopic.”
Airtel also told the Senate committee that there was bias in the allocation of spectrum, with Safaricom holding much more than its rivals.
“Despite investing heavily in the network to improve customer experience, we continue to grapple with lack of spectrum especially in 4G/LTE which as advised by the CA is unavailable, yet the dominant player holds excessive spectrum,” Airtel said.
Airtel’s petition to Parliament shows that it has been allocated 50 MHz of the spectrum compared to 82.5 MHz for Safaricom and 37.5 MHz for Telkom Kenya.
Safaricom’s submission did not address the claim of hogging spectrum but emphasised its huge investment in infrastructure and payment of the largest corporate taxes in the country.
“Through our operations in the Kenyan economy, we have created additional government revenue of approximately Sh83 billion per annum over the past decade as a result of upstream and downstream economic activity,” Safaricom said.
“In the last financial year alone, Sh105.9 billion in taxes, duties and licence fees was paid by Safaricom.”
Airtel also argued that CA’s failure to review the fees that mobile phone operators bill each other for interconnecting calls since 2015 has continued to favour Safaricom, which also enjoys more subscribers.
The charges commonly referred to as mobile termination rate (MTR) have remained at Sh0.99 for the past six years.
Industry data shows that the rate has been falling gradually from a high of Sh4.42 in 2011 to the current Sh0.99, which has been in place since 2015, marking a freeze of more than five years.
A previous cut in the rate in 2010 from Sh4.42 to Sh2.21 sparked a price war among Kenyan telecoms operators.
Analysts reckon that and Airtel and Telkom Kenya will be the main beneficiaries from a review of the mobile termination rate, along with consumers.
Revenues for the larger operator Safaricom would likely fall but the impact would be more limited for its earnings due to its high subscriber numbers.
European countries, including France, the United Kingdom, and Germany, have in recent years reviewed their MTRs downwards, leading to an increase in subscriber numbers due to low calling tariffs.
In July, the CA said that time was ripe for Kenya to review the MTR to match shifts in technology that have made mobile telephony more efficient.
The CAK has in the past defended Safaricom against claims that the telco had abused its dominance in the telecommunications sector.
CAK director-general Wang’ombe Kariuki in April told the Senate ICT committee that compliance checks on Safaricom’s M-Pesa, voice, and text services did not reveal contracts and practices that have exposed its rivals Airtel and Telkom to unfair competition.
