The World Bank says high market concentration and regulatory inaction in Kenya’s telecommunications sector have made mobile data prices high compared to regional peers.
The multilateral lender points to Safaricom’s dominance as a possible factor behind persistently high broadband internet prices.
It says Safaricom’s monthly 1GB and 20GB data bundles cost more than rivals Airtel and Telkom, and that prices in Ghana, Nigeria, Rwanda and Zambia are lower.
“Market power may be allowing some providers in Kenya to charge prices that are higher than domestic competitors and international benchmarks,” the bank says in its latest Kenya Economic Update.
“Safaricom’s mobile broadband prices for monthly 1GB and 20GB bundles are higher than those of its competitors in Kenya and higher than in key regional comparators, such as Ghana, Nigeria, Rwanda, and Zambia.”
The World Bank says Kenya’s mobile and mobile broadband markets are “highly concentrated” and far exceed the threshold for a competitive market, while mobile money transactions verge on monopoly levels.
Data from the Communications Authority (CA) shows that Safaricom maintains the highest market share in mobile broadband (62.7 percent) and mobile money (89.7 percent) as of September.
Airtel has a 33.5 percent and 10.3 percent share, respectively, while Telkom has a paltry 1.2 percent and 0.0 percent share in the two markets.
A comparison of the three companies’ monthly data bundle rates shows that for Safaricom, Sh250 buys 1GB, 50 call minutes and 100 SMSs, while Sh3,000 buys 27GB, 1,500 minutes and 3,000 SMSs.
Airtel's bundles range from Sh300 for 7GB, 200 minutes and 500 SMSs to Sh1,500 for 90GB, 1,000 minutes and 5,000 SMSs. Telkom’s range from Sh250 for 2GB to Sh3,000 for 50GB.
A 2016 CA market study identified Safaricom as having significant market power (SMP) in mobile communications and mobile money, as well as the telecommunications towers market.
The World Bank raises concerns that while several “remedies” were proposed, no formal determination of dominance or enforcement of measures has followed.
“While Kenya’s legal framework provides the basic legal framework for ex ante and ex post measures to identify market dominance and curb anti-competitive behaviour, CA has not formally designated players as dominant or holding SMP,” the report says.
The lender argues that without such SMP designations, the communications watchdog cannot impose stronger measures that could curb data prices, leaving Kenyans bearing higher costs as digital connectivity becomes increasingly essential for economic activity.
“Such a designation would allow the Communications Authority to impose regulatory obligations on firms found to have SMP under the law, like asymmetric infrastructure access obligations, quality-of-service obligations,” says the report.
The Business Daily has sought an explanation from CA on the nine-year delay. The Competition Authority of Kenya (CAK) said such a designation does not fall within its mandate or influence its oversight.
“Our position has always been that dominance is not a problem; the issue becomes when a market player abuses the dominance. Designating Safaricom as having significant market power does not significantly change how we regulate the sector,” a CAK official said by phone.
The World Bank says Kenya’s interventions, such as tariff approvals and lowering the rates network companies charge each other for calls across networks, have had only a limited impact, and the market structure is largely unchanged.
The lender’s analysis shows MTN Ghana third behind Safaricom and Airtel Kenya in monthly data bundle pricing, while MTN Rwanda is the cheapest.
