COMPETITION

Safaricom is big on investment, not dominant — Michael Joseph

Michael Joseph says Safaricom started business in Kenya six months after Kencell and its success is as a result of huge investments.

In Summary

•The interim CEO says the telco has invested billions into its voice, data and mobile money business that is why it is successful.

•There have been calls to separate M-Pesa from the parent company with its competitors calling on authorities to declare Safaricom dominant. 

Safaricom interim CEO Michael Joseph.
Safaricom interim CEO Michael Joseph.
Image: FILE

Safaricom interim CEO Michael Joseph has downplayed the push to separate M-Pesa from the parent company, even as he moves to defend the telco from dominance claims.

Joseph now says separating the two will amount to ‘punishment’ as their systems complement each other.

He has also dismissed claims that Safaricom is dominant as claimed by its competitors who have decried dominance by the company on voice, data and mobile money markets.

In an interview on a local television station on Thursday night, Joseph said Safaricom is only ‘big’ as a result of multi-billion investments in developing its products.

Proposals in the Kenya Information and Communications (Amendment) Bill, 2019 wants telecommunication companies to split their core business from other ventures, and seek regulatory approvals for each.

“Unless you have an intention that you have one mobile money platform for everybody in Kenya then it might be some merit but just to separate it to punish Safaricom, I don’t see the point,” Joseph said.

Meanwhile, Joseph has noted that Safaricom started business in Kenya six months after its then main competitor Kencell had launched in the country.

“Why are we big? It’s not because we got some special favour. It’s what we have done, we have invested more than our nearest competitors. We have invested enormous amount of money in our network, in our agent network, that is why we are successful,” Joseph said.

The telco provides voice, data, financial services and enterprise solutions for a range of customers, small businesses and government, using a variety of platforms.

It boasts of over 31.8 million customers, providing over 200,000 touch points for our customers and offering over 100 different products under our portfolio.

Listed on the Nairobi Securities Exchange(NSE) and with annual revenues in excess of Sh200 billion, Safaricom invested Sh38 billion in infrastructure this year, providing over 93 per cent of Kenya’s population with 4G and 3G coverage and providing 2G coverage to 96 per cent of Kenyans. 

Its M-Pesa platform launched in March 2007 has over 22.6 million active customers and close to 170,000 agent outlets countrywide.

If declared dominant, it will not be able to unilaterally dictate its tariffs or prices and must do so through consultation with the regulator- Communications Authority of Kenya (CA).

A dominant player is also forced to share its capital-intensive infrastructure with other players, such as transmission masts at a rate to be determined in consultation with the regulator.

In 2016, CA contracted UK-based consultant-Analysys Mason to conduct a market study in a Sh30 million tender which declared Safaricom dominant.

The firm recommended separating M-Pesa from Safaricom, findings that were later dismissed by ICT Cabinet Secretary Joe Mucheru.