Watchdog says Safaricom not abusing dominance

An M-Pesa user withdraws cash from a Safaricom agent. FILE PHOTO | NMG
An M-Pesa user withdraws cash from a Safaricom agent. FILE PHOTO | NMG 

The competition watchdog has warned Parliament against punishing the dominant Safaricom #ticker:SCOM saying it will have ripple effects on the entire economy and that the action is not needed.

The Competition Authority of Kenya (CAK) said it had not established evidence of Safaricom, which has a 67 per cent market share, abusing its dominance in any of its business sectors, eliminating the need for action by regulators.

The watchdog said the mobile telecommunication sector is dynamic and any drastic regulatory action will impact on financial services, among other sensitive areas.


40pc of NSE

Wang’ombe Kariuki, CAK chief executive told Parliament’s ICT committee that Safaricom, which is the leading player controls about 40 per cent of the Nairobi Securities Exchange.

“Safaricom has been progressively losing its market share over the period analysed. This means Safaricom does not possess Significant Market Power (SMP) over any of the markets analysed,” said Mr Kariuki.

“Based on International Best Practices and our argument it would be premature to impose ex-ante intervention in the analysed markets.”

A draft report of a study commissioned by Kenya’s telecoms regulator recommended that Safaricom should offer rivals access to its transmission sites and its vast network of mobile money outlets to increase competition.

Airtel Kenya, which has 19.7 per cent stake, and Telkom (8.6 per cent) have called for urgent implementation of the report.

“Any regulatory intervention should be aimed at supporting and increasing consumer welfare and at no time should regulatory intervention have an object of deepening private shareholders’ gains,” Mr Kariuki said Tuesday.

Short-term measure

“Our opinion is that imposition of regulations for mandatory sharing of infrastructure is only at short term measure.

Safaricom reckons that regulators should not seek to punish its success.

The committee is looking into telcos dominance in the Kenyan market that has seen top managers of telecommunications firms appear before legislators amid a push by competitors to have Safaricom declared dominant.

Safaricom was earlier found guilty of entering restrictive agreements for M-Pesa money agents which prohibited the selling or promotion of services by its rivals.

The company was ordered to review the restrictive clauses in the agreements, allowing the agents to offer mobile money services and products from other operators, said Mr Kariuki.