The hot debate regarding Safaricom’s assumed dominance in the local telecoms market has been around for some time now. However, the whole discussion has frequently been featuring in the dailies as telco heads try to support or dismiss studies and recommendations sourced from independent bodies (Analysys Mason) in a bid to protect the corporations they represent. This tussle cuts across multiple regulators (CA and CAK), Parliament and the carriers themselves.
Airtel has been very vocal and has, in most cases, played the victim of Safaricom’s massive market share. While it comes second to Safaricom and has gained a substantial number of subscribers in the last quarter (and won the heart of many Kenyans for its reasonable pricing), Airtel still feels that its ability to fairly compete is out of hand as Safaricom’s power dictates market trends.
The newest opinion in this matter has, for the first time, been voiced by Telkom Kenya’s CEO Aldo Mareuse. Mr Aldo says that the debate couldn’t have come at a better time as the country needs to install checks and balances to maximize benefits from the mobile operator business – yet the industry appears to be reluctant to declare Safaricom a dominant player for various reasons.
Highest Market Concentration
Mr Aldo makes a valid point, Kenya is the sole telco industry with one player that controls more than 95 per cent of the sector’s value and share. According to the CEO, no state in the globe allows the existence of such a structure because it limits competition and investments, an action that can hurt the economy in the long run.
This has since been demonstrated in the past days when Safaricom’s network outage almost put the country into a standstill as people could not communicate or transact with mobile money owing to the numbers it commands. If consumers have a choice to equally source the services of other carriers, then cases of an unforeseen outage cannot be as economically damaging as observed in the past.
“Locally, this situation is only comparable to the monopolies before liberalization. We cannot, therefore, continue to claim that the Telco industry is competitive. There is an urgent need for industry regulation,” argues Mr Aldo.
Analysys Mason’s Recommendations
The CA tasked Analysys Mason to perform a competition market study. The report went live more than six months ago, and over that time, key players and stakeholders have been gauging the outcome of the recommendations of the report should they be implemented. However, most of the recommendations made have since been disputed by Safaricom, which still argues that it’s the victim here and should not be punished for being awesome in the telco business.
In line with this report, Mr Aldo argues that the report is bigger than what Safaricom is trying to sell. In principle, the recommendations were arrived at as a consumer protection consensus, in addition to fostering unobjectionable competition and enable all players to deliver more choices to Kenyans.
“To have the current set of players in the market accomplish such a state of competition today would not be possible,” adds Telkom CEO.
Innovation
A couple of days ago, Safaricom’s CEO argued that the company will not submit to pressures from competitors that have slashed the rates of their products. He cemented his stand that these players will realize reduced revenues, hence will fail to innovate and blame Safaricom in the long run.
Contrastingly, Mr Aldo innovation is not feasible if competition is unfair. The innovation Safaricom claims to put in place should be replicated across the board if additional jobs opportunities are to be created.
“The Telco consumer also benefits from this desired level of competition, through better pricing and the introduction of a wider variety of products that consumers can choose from,” points out Mr. Aldo.
‘But small telcos are just lazy’
Safaricom has been at the forefront to defend its position, that it has worked hard to be where it is, a feat that rivals should emulate if they put in the work.
Mr Aldo begs to differ because such arguments are deceiving. Telkom, for instance, has spent up to Kes 8 billion to bolster the services of its infrastructure in the past 24 months. Telco has also invested heavily in underseas cables that connect Kenya to Africa and the rest of the world.
“All this is guided by the view that Kenya is an attractive investment destination. Moreover, Telkom’s belief in its mission; connecting the people that make Kenya move, has seen it heavily invest in market research to appreciate consumer trends and dynamics, to enable us keep our primary stakeholder – the consumer – at the centre,” argues the CEO.
Telkom has since partnered with Google’s Project Loon to deliver innovative LTE access to remote parts of the country using high-flying balloons.
He adds, “For us to continue on this path of innovation, there remains urgent need to implement regulation, if we are to encourage innovation for the sector that will be of benefit to the consumer.”
End Game
According to Aldo, Telkom is actually opposed to CA’s approach to regulating market dominance because declaring Safaricom’s upper hand in the business without implementing corrective measure will admittedly hurt the ICT sector and by extension, the economy.
So?
“The regulator needs to urgently declare dominance and implement measures with consumers as the biggest beneficiary,” he concludes.
