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How telcos are hoodwinking the State regulator

By Macharia Kamau | Published Sun, July 9th 2017 at 00:00, Updated July 8th 2017 at 19:14 GMT +3
Airtel Shop on Koinange Street. (Photo: Wilberforce Okwiri/Standard)

Kenya has 39.1 million mobile users, translating to a mobile penetration rate of 86.2 per cent, one of the highest in Africa. This is according to the latest telecommunications industry report by the Communications Authority of Kenya (CA).

But in a market where mobile network operators could be inflating figures, probably in a bid to boost their image to the public, it is difficult to ascertain the true nature of mobile penetration in the country.

During the financial year to June 2016, the number of subscribers for some local networks has been declining after the telecommunications regulator forced the operators to revise the numbers as well as the methodologies used in arriving at the number of customers.

Earlier in the year, CA directed operators  to ensure that they stick to the laid out guidelines in filing their numbers with the Authority. In the quarterly updates to the regulator, the telcos are supposed to declare the number of customers that have been active over a 90-day period, which would ensure the data is authentic and reliable, which is critical in informing policy decisions.

Non-existent customers

This has, however, not been the case and over the first three quarters of the 2016/17 financial year, CA has called out three operators publicly for having inflated their customer numbers.

The most recent to have been outed by the regulator is Airtel. The firm lost five million mobile money customers between January and March 2017, leaving 1.7 million subscribers by end of March, compared to 6.7 million Airtel Money customers it had registered by end of December 2016.

While a number of customers might have ditched the network for its rivals, the vast majority were ghost customers and the realignment was due to the operator cleaning up its registry and weeding out non-existent customers.

According to CA, the numbers submitted by the operator during the quarter showed discrepancies, whereby the number of subscribers on Airtel Money were bigger than the number of users on the Airtel network.

“The number of mobile money subscriptions were higher than their overall number of mobile subscribers which should not be the case. Upon more clarification by the Authority, the operator re-submitted their data based on a revenue generating period which is 90 days. This then resulted in drastic drop in their mobile money statistics and the mobile money subscriptions during the period in general,” said CA after it published the report.

Another operator who has also run into trouble with the regulator for inflating its subscriber numbers include Equity Bank’s Mobile Virtual Network Operator (MVNO), FInserve, which operates Equitel. During the quarter to December 2016, the operator had to revise down the number of data customers. CA says this has had the impact of reducing the number of Internet subscribers by 3.6 per cent to 25.7 million from 26.6 million subscriptions in September 2016.

In the report for the quarter ending March 2017, CA noted that Equitel had to look at its numbers again which resulted in the an overall decline in market share.

“Finserve Africa Limited lost 2.1 percentage points of market share during the quarter under review to stand at 3.8 per cent. This was mainly attributed to the revision of data by the service provider during the quarter under review,” said the third quarter report.

Another telco that has been on the spot for inflating subscriber numbers is Telkom Kenya when it was still under Orange of France. The operator as of the June 2016 report had 5.2 million subscribers but after an audit, it found that it had 2.9 million customers that were active over a 90-day period.

Ensure compliance

CA has in the past told the operators that it would undertake independent audits to verify that the numbers they file are in line with the actual customers that they have on their networks.

Despite the numerous instances where operators have fed the regulator false numbers, CA has not penalised any of them.

“To ensure compliance with regulatory requirements, the Authority undertakes compliance monitoring from time to time. The Authority has directed caution to all operators, and shall subsequently embark on a compliance audit on the systems and procedures used by the mobile network operators in submission of compliance reports, with the aim to determine their validity,” said CA.


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