Proposed competition regulations unfair – Collymore

July 10, 2015
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Collymore says Safaricom’s dominance in key segments of the telecommunication sector has been earned through prudent management, deep customer insights and massive investment in infrastructure/CFM BUSINESS
Collymore says Safaricom’s dominance in key segments of the telecommunication sector has been earned through prudent management, deep customer insights and massive investment in infrastructure/CFM BUSINESS
NAIROBI, Kenya, Jul 10 – Safaricom has opposed new competition rules have been proposed by the Communications Authority of Kenya pointing out that it will result in the erosion of the gains made in the Kenya ICT sector.

Safaricom Chief Executive Bob Collymore says the proposed Tariffs Regulations and Fair Competition rules go against international best practice on fair competition and equality.

Under the new regulations, the criterion for determining a licensee as dominant has been lowered to over 50 percent which has effectively placed Safaricom as dominant in most key product categories, subjecting the firm to specific rules.

Collymore says Safaricom’s dominance in key segments of the telecommunication sector has been earned through prudent management, deep customer insights and massive investment in infrastructure.

In the previous regulations, a dominant player had to abuse dominance for punitive action to be taken. In the new regulations, a company does not need to abuse dominance for such measures to be taken, which begs the question whether the regulator is punishing success.

“The new rules set a stage for worrying penalties at the behest of a competitor who is not willing to innovate. It will unfairly skew the market in favour of an operator who has been slow in responding to customer needs, therefore distorting the free market and discounting the value of market competition,” Collymore added.

Safaricom has a subscriber market share of 67.4 percent, mobile money transfer service of 77.4 percent, voice traffic 84 percent, SMS 96.4 percent, and mobile data subscription share at 70.7 percent.

Airtel Kenya has been calling on to the government and regulator to do more to control the market, saying that customers need to be given an opportunity to make choices.

“The problem is that the dominant player is making all the profits which puts Airtel and other small players in a very difficult situation as it becomes hard to sustain ourselves. The dominant player, therefore continue to get stronger as they have the ability to invest more into their network,” Airtel CEO Adil El Youssefi said in an Interview with Capital FM Business.

READ: Airtel Kenya CEO talks work, telco dominance and love for tennis

The firm has been proposing to have Safaricom’s money transfer system M-PESA made accessible to other service providers so as to equalise the market.

Youssefi says despite Airtel being among the major service providers in the country, it was on the verge of being run down by Safaricom’s monopoly.

“Almost all the mobile money transactions are done on M-PESA and for one to access it they must have the Safaricom line, this is unfair for those subscribed to other networks. This playing field must be levelled,” said Youssefi.

CA Director General Francis Wangusi wants to even out competition in the sector, to see that the old market does not prevent new markets from emerging.

READ: I’m happy we won digital migration battle – Wangusi

“That is going to be our next front. In fact the issue of dominance is going to be another one, maybe nearly equal to Digital Migration. But we are not afraid of it as a regulator, and we are going to deal with it within the requirements of the law,” Wangusi assures.

This is in an effort to lift Airtel Kenya and Telkom Kenya (Orange) into profitably and the regulator argues that these measures will allow for a sustainable industry of three players.

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