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Airtel rekindles push to have Safaricom declared dominant

NEWS
By Frankline Sunday | October 29th 2021
By Frankline Sunday | October 29th 2021
NEWS

Kenya’s second-largest telco Airtel has renewed calls to have Safaricom officially declared dominant in the country’s retail mobile sector.

Airtel also wants tougher regulatory measures introduced on the market leader to even the playing field for other operators.

In submissions to the Senate Committee on Information and Technology yesterday, Airtel Kenya said Safaricom’s 64 per cent market share in the telecommunications market has "thwarted competition and reduced options available to consumers."

"There has been reluctance in declaring Safaricom dominant in the retail mobile market and the retail mobile money market,” Airtel Kenya Head of Regulatory Ganson Lewela told the committee.

"Declaring Safaricom dominant is the first step to ensuring market competitiveness, which we believe has been the sticking point and key barrier in taking any steps to rectify any market anomalies in Kenya,” he added.

Mr Lewela was giving the firm’s position on an inquiry on alleged monopolistic practices by Safaricom. He was accompanied by Legal and Regulatory Director Joy Nyaga and Finance Director Shailendra Singh.

But the Kenya Private Sector Alliance (Kepsa) has backed Safaricom, saying the telco cannot be declared dominant due to lack of data to guide the process.

The private-sector lobby said the government, through regulators like the Central Bank of Kenya (CBK), needs to conduct a baseline survey to establish the level of dominance across the various market segments in the telecommunications sector.

"It is Kepsa’s position that is important to distinguish between monopolistic practices versus having a large enough market share to have a de-facto monopoly,” a representative from the lobby told the committee.

"From Kepsa, there is no consolidated industry position, either on dominant practices or on the dominant market share of Safaricom Ltd.”

According to Kepsa, the last competition study conducted five years ago is outdated and does not factor in new developments across the various sub-sectors in the ICT sector.

The lobby further said Safaricom cannot be declared dominant in mobile money because of a lack of adequate data comparing M-Pesa to other payment formats like cash and debit cards.

“There is only comparison of one mobile money service to the others,” said Kepsa.

"Until such reporting of market share of all payment types is harmonised, then it is difficult to declare any one player dominant in that service.”

The private sector lobby said Safaricom’s higher number of cellphone towers and sites is a reflection of the extra capacity needed by the firm to service its larger customer base and not of its dominance in the infrastructure market.

“An infrastructure monopoly that does affect the ICT sector, is that of Kenya Power, who have a monopoly on power distribution, yet power costs are high, and KPLC delivers services that have such frequent outages that providers need to incur high costs of backup solar or diesel generators in order to keep services always on,” the lobby told the committee.

However, Airtel Finance Director Singh said the firm has invested billions in infrastructure for voice and mobile data services, but despite having competitive value propositions, its share remains stunted due to the current market structure.

He said unfair distribution of frequency spectrum, high mobile termination rates and lack of mobile money agent and merchant interoperability are some of the barriers to effective competition in the sector.

Head of Regulatory Lewela said "the dominant player holds 32.5MHz more spectrum than Airtel and 45MHz more spectrum than Telkom."

"Despite investing heavily on the network to improve customer experience, we continue to grapple with lack of spectrum, especially in 4G/LTE, which as advised by the CA is unavailable, yet the dominant player holds excessive spectrum,” he said.

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