Kenya: Competition report shelves position on splitting Safaricom

A research consulting firm – Analysys Mason – appointed 2 years ago to assess competition in Kenya’s wireless sector says it has shelved its earlier proposal that Safaricom’s M-Pesa business be separated to prevent market distortion, Business Daily reported.

The firm says it reached the decision after consultation with sector stakeholders. This remedy, it said, could be seen as disproportionate and constraining the Kenyan telecommunications regulator – the Communications Authority (CA)’s – discretion to act as it saw fit at the time.

Analysys Mason’s earlier report on market dominance, which was commissioned by the Communications Authority, said that Safaricom is dominant in the mobile money and mobile communications sectors and proposed a split of the 2 businesses.

Analysys Mason’s latest Telecommunication Competition Market Study in Kenya recommends that Safaricom stop on-net discounts and individually tailored loyalty schemes so as to reduce the barriers to entry for smaller players. This means that the popular mobile money transfer platform may soon become cheaper for non-Safaricom users if the proposal is effected.

Under the new proposal, Safaricom would also be required to share its infrastructure with other networks to improve accessibility in 7 of the most rural counties for 5 years, ensuring that other players are able to penetrate the remote areas where currently Safaricom is the sole available mobile provider.

According to the report, the original tower sharing proposal covered 14 counties and has now been reduced to 7 northern counties based on the principle of proportionality and in recognition of investment made by Safaricom in rural infrastructure. The 7 counties targeted for infrastructure sharing are Isiolo, Garissa, Mandera, Marsabit, Samburu, Turkana and Wajir.

Source: Telecom Paper