New bill seeks to hive off mobile cash from telcos sector

Telecommunications services providers could be forced to break off mobile money from their core business if a new Bill is passed into law.

This follows proposals in the Kenya Information and Communications (Amendment) Bill, 2019, for a new regulatory framework for Kenyan telecommunication service providers.

The Bill wants telecommunication companies to split their core business from other ventures and seek regulatory approvals for each.

“A person may engage in any other business provided that such person shall; obtain the relevant licences from the respective regulators of any industry or sector ventured into; legally split or separate the telecommunication business from such other business; and provide separate accounts and reports in respect of all businesses carried out,” says the Bill.

Safaricom, Airtel and Telkom Kenya will have to separate their mobile money offering from their core telecommunication activities to create new companies with separate accounts regulated by the Central Bank of Kenya.

The Bill gives the telcos six months from the date it is signed into law to effect the separation.

This will have a transformative impact particularly on Safaricom that has in recent years launched offerings in mobile lending, e-commerce, health, education and agriculture, among others.

The Bill has been proposed by Gem Member of Parliament Elisha Odhiambo and is the second attempt to have Parliament introduce legislation to break up service providers.

Mr Odhiambo seems to have taken over the Bill from his Gem predecessor and former Minority Leader Jakoyo Midiwo, who made an unsuccessful attempt to have the law passed in the previous Parliament.

The MP says the Bill has been gazetted he is prepared to present it to the floor of the House in the coming days.

It comes after the Communications Authority of Kenya (CA) appears to have abandoned a contentious report on dominance in the telecommunication sector.

CA paid UK-based consultant Analysys Mason Sh30 million in 2016 to conduct the study, with the authority promising to publish it within the year.

The report has however been fraught with delays and contentious parts redacted.

Analysys Mason had recommended separating M-Pesa from Safaricom, a finding that was dismissed by Information, Communication and Technology Cabinet Secretary Joseph Mucheru.

At the same time, telcos will have to refund subscribers Sh10 worth of airtime for dropped calls in a bid to improve quality of service in the sector.

The Bill also seeks to broaden the Universal Service Fund beyond rollout of network infrastructure and prescribes a new reporting formula for the CA.

“Two per cent of the fund shall be used for increasing access to telecommunications and advanced services in schools, libraries and rural health care facilities,” the Bill proposes.

Other proposals include 10 per cent for ensuring increased nationwide access to advanced telecommunications services and 10 per cent for furthering the other objectives of the fund as the commission may determine.