Consultant revises position on splitting Safaricom


A Safaricom customer uses M-Pesa. file photo | nmg

A UK company appointed two years ago to assess competition in Kenya's telecoms sector says it has shelved its earlier proposal that Safaricom's #ticker:SCOM M-Pesa business be separated to prevent market distortion.

The specialist firm, Analysys Mason, says it reached the decision after consultations with sector stakeholders.

“This remedy could be seen as disproportionate and constraining the CA’s (Communications Authority) discretion to act as it saw fit at the time. Final report is therefore silent on what further remedies the CA might consider,” the firm said in Nairobi during presentation of its Telecommunication Competition Market Study in Kenya during a public debate Tuesday.

Its earlier report on market dominance, which was commissioned by the Communications Authority, said that Safaricom is dominant in the mobile money and mobile communications sectors and proposed a split of the two businesses.

Cheaper cash transfers

In its report launched today, Analysys Mason recommends that Safaricom stops on-net discounts and individually tailored loyalty schemes so as to reduce the barriers to entry for smaller players.

This means that the popular mobile money transfer platform may soon become cheaper for non-Safaricom users if the proposal is effected.

Infrastructure sharing

Under the new guidelines, Safaricom will also be required to share its infrastructure with other networks to improve accessibility in seven of the most rural counties for 5 years, ensuring that other players are able to penetrate the remote areas where currently Safaricom is the sole available mobile provider.

“The original tower sharing proposal covered 14 counties and has now been reduced to 7 northern counties based on principle of proportionality and in recognition of investment made by Safaricom in rural infrastructure,” said the report.

The seven counties targeted for infrastructure sharing are Isiolo, Garissa, Mandera, Marsabit, Samburu, Turkana and Wajir.

The proposals are being discussed by industry stakeholders and could change the landscape of Kenya's telecoms industry which Safaricom has dominated since its entry into the market.

If adopted, the recommendations could breathe life into smaller operators whose survival and growth have stalled.