Competition watchdog downplays Safaricom’s dominance

Competition Authority of Kenya Director General Wang'ombe Kariuki when he appeared before the National Assembly Communication, Information and Innovation Committee on inquiry into legislative and regulatory gaps affecting competition in the telecommunication sub-sector at County Hall, Nairobi at Parliament. [Boniface Okendo/Standard]

The competition watchdog has ruled out the possibility of putting Safaricom under regulatory watch in the wake of renewed dominance accusations.

The Competition Authority of Kenya (CAK), while acknowledging that the telco was dominant in certain segments of the market, including retail and in the telecommunication infrastructure, said yesterday the firm had not abused its market leadership position.

CAK also noted that the firm’s leadership in the market was due to half-hearted competition, noting that other players could take substantial market share from the firm with more aggression.

Controversial study

Wang’ombe Kariuki, director-general CAK, said there was no reason to warrant such drastic action against the firm, as recommended in the controversial Telecommunication Competition Market Study.

He, however, proposed deepening of mobile money interoperability - which allows customers to send and receive money across networks at no extra charges - as among the measures to curtail the firm’s dominance.

“Based on international best practices, it would be premature to impose regulatory intervention,” he told the National Assembly ICT Committee at County Hall in Nairobi.

“There has been a lot of dynamism in the market shares among all the relevant retail markets. Specifically, the dominant firm, Safaricom, has been progressively losing its market share over the period analysed (since 2012).”

Mr Kariuki said Safaricom’s share of the market had declined by 13 per cent in the last six years, while that of its closest rival, Airtel, had expanded by approximately 16 per cent.

“The dominant firm does not possess significant market power and any credible effort by other players can make it lose its market share,” he said.

Legislative gaps

The committee has over the last one month met different telecommunications industry players as it seeks to understand the regulatory and legislative gaps.

It expects a report from the meetings to inform changes in the laws and policy framework governing the industry geared at making it more competitive.

The telcos dominance report, which was published by the Communications Authority of Kenya earlier this year, has dominated the hearings.