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Airtel writes to regulators Communications Authority of Kenya over Safaricom's market share

NEWS
By Kenneth Kwama | January 20th 2015
 

Airtel Kenya has written to Communications Authority of Kenya (CA) and Competitions Authority of Kenya (CAK) asking that Safaricom be declared a dominant player in the market.

Airtel Kenya, which is targeting a bigger share of the country’s voice, SMS, data and mobile-money transfer business, claims Safaricom has been using its dominance to prevent others from growing their business.

It is asking the two regulators to intervene and stop the telecommunications sector’s slide into a monopoly where the market leader, allegedly has freedom to do whatever it wishes.

However, this is not the first time that the market leader is facing such accusations, a claim Safaricom has strongly denied in the past and defended its position in the market.

Mobile subscribers

Airtel claims that Safaricom’s market share has remained over 63 per cent on the basis of mobile subscribers and 78 per cent in voice traffic volumes for the period of January to March 2014. In terms of revenue, it says Safaricom commands about 80 per cent market share.

“These figures are above the threshold that would lead to a rebuttable presumption of dominance. In established competition cases and also in line with the Competition Act chapter 504 in Kenya, sustained market shares of over 50 per cent gives rise to a rebuttable presumption of dominance, while market shares of over 40 per cent are suggestive of possibility of dominance,” claimed Airtel’s letter signed by its Chief Executive Officer Adil El Youssefi.

This came even as the latest data released by the CA in its quarterly report about the industry’s statistics showed the proportion of mobile market shares measured by subscriptions maintained similar trend between July and September 2014.

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“During the quarter under review, Safaricom had a market share of 66.7 per cent, which is a decline of 0.3 per cent compared to last quarter which stood at 68 per cent,” noted CA report.

Airtel’s market share increased to 16.5 per cent, up from 15.7 per cent recorded during the previous quarter. Essar Telecom Limited share declined by 0.4 per cent to reach 7.6 per cent from 8.0 per cent share registered during the previous period. Telkom Kenya (Orange) share increased to 9.2 per cent from the previous 8.3 per cent, recording a 0.9 per cent gain,” stated CAK in the report.

Under Kenyan law, a company that controls at least half of the trade of services or goods is considered dominant, a position that can be abused through practices such as unfair pricing or restricting market access.

According the law, a conviction of abusing a dominant market position can lead to a five-year prison term and as much as Sh10 million fine, according to the Competition Act.
The jury is still out on how this may apply to Safaricom, but this is not the first time that the market leader is facing such accusations.

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