The Communication Authority of Kenya (CAK) today ended speculation that there is plan to split the Safaricom or take drastic actions to check its dominance in the mobile telephone sector. The authority said that its intention is not to punish success but enhance competition to foster growth of the telecommunication sub-sector and prevent any potential abuse of dominance.
CAK Chairman Ngene Gituku said the authority had contracted M/S Analysis Mason of the UK to undertake a telecommunication market study with a view to establishing competition in the various telecommunication sectors. Mr Gituku said the report of the analysis, which the firm submitted to the Authority on February 2017, was shared as part of the consultation envisaged in the ICT sector law.
The report had recommended splitting of M-Pesa from Safaricom and making it an independent company. According to the report, Safaricom is able to set tariffs independent of the market forcing customers to pay higher tariffs due to lack of competition from other players, relative to other mobile money markets in the neighboring countries and across the world.
Although it has not accused Safaricom of abuse of dominance, it notes that preferential treatment given to Safaricom partners such as the Commercial Bank of Africa (CBA) and the Kenya Commercial Bank (KCB) could be deemed uncompetitive. To remedy the situation, the report recommends higher level of interoperability in the market by December 2017 or Safaricom be forced to hive off M-Pesa into a separate company.
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“Once the on-going review is completed, the Authority shall subject the report to a process of stakeholder consultation in line with the constitutional requirements. The authority is targeting to finalize and release its final report in May 2017,” added Gituku.
CAK Director General eng. Francis Wangusi insisted that the authority will only intervene in terms of price regulation , provision of certain services, quality of services provided and any abuse or potential abuse of dominance. He said that it will not split any company but provide moderation and prevent small markets from being stumbled upon by big markets.
He assured the telecommunication industry and other stakeholders that the CAK is committed to fostering competition and innovations in the ICT sector in order to spur emergence of new services to support the demands of a modern economy. Hiving off M-Pesa would increase Safaricom’s operational costs as it would come with a duplication of support services, something its CEO Bob Colymore is against.
“I am pretty hostile to the idea. We can’t have other people dictating whether we break up our company or not,” said Colymore in a recent interview.
