Kenya govt confident with Safaricom

September 4, 2010
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, NAIROBI, Kenya, Sep 4 – The government has expressed its confidence in Safaricom, Kenya\’s biggest mobile-network operator, even as the telecommunication service provider continues to face stiff competition.

Investment Secretary Esther Koimett said as a shareholder, the government has faith in the management of the company and the strategies they continue to put in place to enhance their shareholder value.

"The contribution of Safaricom to the government is both in dividend and taxes. The company has played an important role not just in revenues but also in the jobs it has created. We value that very much and we are happy that they have a game plan for dealing with competition," she said.

The introduction of recent guidelines such as the Kenya Information and Communication – Fair Competition & Equality Regulations of 2010, have been viewed as punitive to Safaricom which currently is the dominant player in the sector.

Many people have questioned why the government is going ahead to implement laws that seem to control or curtail its growth despite holding a 35 percent stake in the company.

Mrs Koimett however seemed to defend the regulations saying their formulation is only meant to ensure a level playing field for all operators which would consequently benefit all stakeholders in the market.

"The government believes in competition and that is why this sector was liberalised; that\’s why we have had all these reforms over the years. We now have four operators and we would like all of them to compete in a healthy environment," she said.

While the government appreciates the contribution to the exchequer, which has seen the firm named the highest tax payer three years in a row, the Investment Secretary pointed out that they would like to see the other operators become just as successful.

For instance the government owns 49 percent (stake) in Telkom Kenya she said adding that they would like to see it remit huge amounts to the national kitty and create many job opportunities as well.

"The competition is healthy and it\’s welcome and I\’m glad to hear Michael (Joseph, Safaricom CEO) say that they are going to be looking into shareholders interest; so we are not worried as a shareholder. We know we have a good management team and that they have good plans that will ensure that it is going to be competitive," she added.

Despite this reassurance, it looks like Safaricom still has more battles to fight especially in regards to regulations.

This is because even before dust has settled on the slashing of the interconnection rate by 50 percent to Sh2.21, the Communications Commission of Kenya has already indicated its intention to cap the charges on mobile money transfer service particularly for the non registered users and those from other networks.

However, Safaricom has vowed to fight this move arguing that their world famous M-PESA was their invention and as such have a right to decide how to operate it.

Going by how its opposition to laws it deems as punitive have been handled, only time will tell whether the government will go ahead and implement them or back down and seek consensus with the operator that has indicated its intention to maintain its position as the market leader against all odds.

 

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