Safaricom to continue enjoying Market Freedom as Telcos Market Dominance Law delays

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  • 5 years ago
  • Posted: April 19, 2016 at 2:16 pm

Since 2010, Airtel has been pushing for Safaricom to be declared a Dominant Market Player, a push that saw the then Cabinet Secretary Mr. Fred Matiang’i and Communication Authority side with Airtel on one hand while Competition Authority of Kenya, Parliament and Attorney General side with Safaricom on the other hand. As the discussions and the politics on the push to declare Safaricom a dominant player progressed, it reached a point where the Communication Authority was stripped of its power to declare any telco a dominant player, forcing the CA after consultation with Competition Authority of Kenya and the Institute of Economic Affairs to lay down a road map for enacting new telcos market dominance law.

The road for the new telcos market dominance law started in September last year when the Communication Authority issued an Expression of Interest tender for International Consultants to bid for consulting on behalf of the authority in a wide range of issues including determining relevant markets and sub-markets within the telecommunication sub-sector, the number of players , their respective market shares, review of policy, legal and regulatory frameworks on competition. The expression of Interest however received only one bid, a situation that Francis Wangusi, the Director General for Communications Authority, termed as non-competitive.

Since only one consultant expressed interest in offering the much need consultation services before the telcos market dominance law can be enacted, the next move by CA is to put the tender afresh. If the first bid was successful, then the telcos market dominance law could have been in place by March 2017, but the eight months delay (so far) means that the earliest the telcos market dominance law can be in place is November 2017.

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The delay in enacting the telcos dominance law gives Safaricom about one extra year of freedom to remain a dominant market player without being declared as such. If Safaricom is declared a dominant market player, then Communications Authority will have powers to control its pricing regime, monitor its product offerings and have a say on how it conducts its product promotions. Right now, Safaricom is considered to be an equal player in the telecommunication market, and the claims that it is practicing non-competitive behaviours have not held water. By the time Communication Authority was sending out the expression of interest tender for the market dominance consultant, the authority had declared that both Safaricom and Airtel were on a level playing ground.

As the telcos market dominance law continue to delay, Airtel may opt at some point to follow Yu and Orange in quitting the Kenyan market. The threat to quit Kenya was made by Airtel in early September 2015 if Safaricom is not declared dominant. Although actions by Parliament and President that stripped the Communications Authority of its power to declare telcos as a dominant market player ensured that the declaration that Safaricom is a dominant player is delayed indefinitely, Airtel chose to fight for market share from a disadvantaged position, and between October and December 2015, it gained 0.1% market share compared to Safaricom’s market share loss of 1.6%. The small gain in market share may convince Airtel not to quit Kenya as they wait for the legislation that control market dominance in the telecommunication sector to one day become a reality.

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