Safaricom Blames Regulator for Underinvestment by Kenyan Rivals

NAIROBI (Capital Markets in Africa) – Safaricom Plc accused Kenya’s telecommunications regulator of failing to enforce investment requirements for smaller competitors in return for their licenses, meaning the market share of East Africa’s biggest listed company went unchallenged.

Kenyan lawmakers are studying a report by U.K.-based advisory group Analysys Mason that found Safaricom to be a dominant player in mobile money and mobile communications. It recommended the company open up its mobile-money platform known as M-Pesa to transfers from competing services at prices determined by the regulator. It also proposed that the company be broken up if competition doesn’t improve.

Failures by the Communications Authority “have contributed to the large disparity in the number of base transceiver stations owned by Safaricom, compared to other operators and we should not be punished for this,” the Nairobi-based company said in a submission to parliament.

The CA-commissioned study didn’t find that Safaricom abuses its dominance and proposed multiple regulatory interventions without providing evidence of market failure, the company said.

“Competition must be investment led,” Safaricom’s director of corporate affairs, Stephen Chege, told lawmakers. “If you invest you are likely to get the customers you’re crying you don’t have today, simply because you have not put in the infrastructure for them.”

Safaricom, 40 percent owned by Newbury, England-based Vodafone Plc, has a 67 percent market share. Its closest rival is the local unit of Bharti Airtel Ltd., with 19.7 percent. Safaricom’s M-Pesa is also a market leader and processed about 1.88 trillion shillings ($18.7 billion) in the second quarter.

Source: Bloomberg Business News