Picture: SUPPLIED
Picture: SUPPLIED

Kenya’s telecommunications regulator should find new ways to stimulate competition in the mobile market, which is dominated by Vodacom’s associate company Safaricom, Fitch’s BMI Research says.

"We believe Safaricom’s dominance of telecoms and mobile money services will continue to limit other operators’ ventures in the Kenyan telecoms market…. The regulator must find other ways to encourage competition," BMI said in a research note.

Vodacom bought a 35% stake in Safaricom for about R35bn in 2017.

At last count, Safaricom had a 72.6% share of the mobile market in Kenya, while its mobile money service, M-Pesa, had a market share of 80.6%, according to BMI.

The issue of competition — or the lack thereof — in Kenya’s telecommunications market has been in the public domain for some time. The Communications Authority of Kenya is finalising an industry study of the matter.

Reports surfaced in 2017 that the authority might instruct a breakup of Safaricom, in terms of which the company’s core business would be separated from M-Pesa.

However, the regulator confirmed several weeks ago that it would not go ahead with this proposal. In 2017, a Kenyan treasury report warned that if M-Pesa collapsed, this would have severe knock-on effects on the economy, which depends heavily on mobile payments.

Steve Chege, Safaricom’s corporate affairs director, said the company "has complied with all the required steps to assist the regulator in conducting and concluding the competition study".

"As it is, we await the next steps needed to bring this to a conclusion," Chege said.

BMI said that the Communications Authority of Kenya did have the authority to "punish players with a dominant position, but this has proved difficult with Safaricom".

As such, the regulator had to find other ways to "encourage competition and curtail Safaricom’s dominance".

Efforts taken so far have been toothless, according to BMI.

In 2014, regulators awarded a number of mobile virtual network operator licences, "but their impact has been minimal".

hedleyn@bdfm.co.za

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