Safaricom’s dominance in the telecoms space has always been known. However, the operator has since rejected it being called so, and efforts by regulators and legislators to manage its upper hand in the mobile telephony market has been met by a bitter opposition.
In fact, former CEO the late Bob Collymore even defended the company, that it should not be punished for being successful.
Some years ago, the CA sought the services of Analysys Mason to determine if the carrier business needed some form of adjustments to level the playing field for everybody. The British consultancy firm revealed its findings and recommendations, such as the separation of M-PESA from Safaricom.
‘The two businesses would be required to operate in separate offices, with separate staff below board level, separate branding, separate accounting and separate business operations and support system, customer support systems and management information systems,’ read a report from the firm.
While the recommendations were never really implemented, the discussion appears to have come up again following a Senators meet that maintains Safaricom is a dominant player.
To this end, the Kenya senators want the corporation split into two companies. The split, the senators believe, should level the playing ground because the likes of Telkom and Airtel Kenya can present any notable competition to Safaricom. The two carriers owe Safaricom billions of shillings.
In September 2019, it emerged that Telkom Kenya owed Safaricom KES 1.3 billion incurred for the provision of various services including interconnection, co-location and fibre services.
Safaricom leads the market in terms of data, voice and messaging – controlling up to 60 percent of the departments.
Its mobile money product M-PESA leads the space with up to 99 percent market share.
The Senate says that the split should be done as follows: A. mobile telephony services under the CA, and B. M-PESA under the administration of the CBK.
The senators also want ICT CS Joe Mucheru summoned to the House to explain Safaricom’s dominance.
That’s not all; the Senate actually wants Safaricom declared a dominant player, something that Mason did not say. The announcement, if made, should prompt adjustments to loop in trailing players.
Other issues that have since come up include mobile money interoperability, which the senators think has not been strengthened since launch; and that the carrier business is not growing.
Safaricom registered revenue losses in its HY results for the 2021 FY. Entities like M-PESA lost revenues for the first time following the CBK directive to zero-rate cash transfers under KES 1000.