Regulator drops plan to split up Safaricom
12 months ago, 3 Jan 10:46
A revised competition report by the telecommunications industry regulator has dropped the controversial proposal calling for the splitting of Safaricom #ticker:SCOM into separate business units, drawing the ire of its rivals. Airtel, Kenya’s second-biggest telecommunications company after Safaricom, hit out at the Communications Authority of Kenya (CA), saying failure to finalise the dominance debate and watering down of the report was hurting the smaller operators. The CA has, however, defended the report, saying it was revised after wide consultations and input by all industry stakeholders. The initial draft report leaked to the media in February last year had recommended designation of Safaricom as a dominant operator, which would have seen its voice and mobile money units split into stand-alone businesses that would compete with rival telecommunications firms. Safaricom would also have been required to share its vast infrastructure with its competitors. “We strongly think that the CA urgently needs to reassure all stakeholders of its independence and commitment to ensuring a properly regulated telecoms industry,” Airtel said in an interview. Telkom Kenya is the country’s third-biggest telecommunications firm, while Equitel operates as a sub-licensee of Airtel. CA data shows that at the end of September 2017, Safaricom had a market share by subscription of 71.9 per cent, after steadily rising in the past five years. Meanwhile, the other smaller operators have seen up-and-down fluctuations in their numbers over the half-decade. "Skewed market" Airtel says that recommendations in the revised competition report, which the Business Daily has seen, do not go nearly far enough in addressing a skewed market structure. “The proposed remedies are rather weak and not comprehensive,” said Airtel. Telkom Kenya said the delays in acting on Safaricom’s dominance was detrimental to the industry. “We can’t quantify the direct impact [of the delays] on Telkom. However, from a general perspective, the failure to deal with the issue of dominance in this industry is tantamount to having no regulation of competition in our market,” said Telkom Kenya in a statement. Safaricom, which has consistently raised concerns that designation as a dominant operator and resultant action could be used to punish its success, maintained that the regulator must be cautious to avoid taking action that hurts consumers. “We look forward to the completion of the competition study by the Communications Authority with the caveat that this report must not be used as a tool to reward inefficient operators,” the company’s chief executive officer, Bob Collymore, said in an email response to the Business Daily queries. Airtel claims that the conduct of the CA over the issue of dominance, including repeated delays in conducting stakeholder workshops and failing to adopt a final report, has put the regulator’s neutrality in question. The company says that delays in adopting a position on the issue of dominance are further skewing the telecommunications market and creating uncertainty for its shareholders. The CA had commissioned consultancy firm Analysys Mason to carry out a study of the telecommunications sector, with specific focus on the competitiveness of the market. ...
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