Towards the end of last month, the Communications Authority of Kenya (CA) engaged the public in announcing the findings of Analysys Mason’s report on the competitive landscape in the telecoms industry. Analysys Mason, an independent international consultant was tasked to substantiate claims of anti-competitive behaviours and market dominance in the telecoms sectors that has been alleged to curtail the growth of competing players.
We got a hold of an abridged version of the Telecommunication competition market study in Kenya report and a quick perusal through it paints a picture that clearly means war for Kenya’s largest Telco, Safaricom. Most of the recommendations in the report are targeted at crippling Safaricom’s apparent dominance in the sector and as much as I am for a levelled playing field, I think that some of the recommendations are unfair to mother green, more so, the “forced” sharing of towers and national roaming.
Sharing of Towers and National Roaming
According to the report, Safaricom has such a high network coverage in the country that the other telcos, in particular, Airtel and Telkom cannot match this coverage without incurring some significant losses. “With their current market shares and Average Revenue Per User (ARPU), Airtel and Telkom cannot profitably extend their current 2G or 3G geographic coverage and are likely to face similar financial difficulties in rolling out 4G infrastructure in the more rural parts of the country,” reads the report.
The report says that the lack of ubiquitous coverage prevents Airtel and Telkom from acquiring subscribers in non-covered areas but also has an impact in covered areas as some users will subscribe to Safaricom to maximise the chance of being covered irrespective of their location.
To counter this, Analysys Mason recommends that, “Safaricom should be required to provide other Tier 1 mobile operators with access to its sites in designated counties (Isiolo, Garissa, Mandera, Marsabit, Samburu, Turkana and Wajir) where there is a large disparity in the number of sites deployed by Safaricom and the number deployed by the other two Tier 1 mobile operators.”
The report goes to further suggest that Safaricom cannot refuse to share a site without proper reason. “In the event that Safaricom believes that there are technical reasons why sharing is not feasible at a particular site (e.g. due to maximum wind loading on the tower), the company may request an exemption from the CA, stating the rationale and providing supporting calculations as appropriate. The access seeker should have the right to examine the calculations and commission its own site inspection to validate them, if necessary.”
Apparently, this remedy aims to allow Airtel and Telkom to match Safaricom’s coverage in the short term, and thus have the opportunity to gain market share and promote infrastructure-based competition.
Great Network Coverage is Safaricom’s Competitive Advantage
A quick research on my part reveals that Safaricom has spent an average of 100 billion Shillings in the past four years to improve its network infrastructure. This amount was not given as a grant but came from the company’s account. Despite the fact that Safaricom stands to gain additional revenue from leasing out their sites to other telcos, I believe that they should not be forced to do so.
They made an investment to ensure that they offer the best network coverage in the country, besides, great network coverage is Safaricom’s competitive advantage, taking this away will not only affect the company’s revenue but will also be anti-competitive, if I may say.
The truth is, Safaricom is not the cheapest network in Kenya but that is for a good reason, reliability. The other Tier 1 telcos have used their lower prices as their competitive advantage, evidenced by their promotional material that keeps reminding customers of their cheap prices. Despite Safaricom’s higher prices, their network coverage remains unmatched, just like Faiba 4G’s data prices, Telkom’s freedom bundles and Airtel’s unliminet remain unmatched in their own perspective.
Safaricom has not always been at the helm of the telecoms market. In case you forgot, the company was born out of Telkom Kenya and at some point, Kencell (now Airtel), was at the peak. However, a series of good decisions and proper investment saw Safaricom take the crown as Kenya’s biggest telco and one of the most profitable companies in the country and I don’t think they should be punished for that.