NOT PURELY TELECOMS

Senators reignite push to split Safaricom

They want telephony services separated from M-Pesa transactions.

In Summary

• Senators claim Safaricom controls 60 per cent data bundles, calls and Short Message Service (SMS).

• Muranga’s Senator Irungu Kang’ata said Kenya must strive to achieve a perfect market of a competitive economy.

Safaricom House
Safaricom House
Image: FILE

Safaricom should be declared dominant and split into two firms, senators have said.

They said other players—Telkom and Airtel—operate at the mercy of Safaricom as they owe it billions of shillings. Safaricom, according to the lawmakers, controls 60 per cent data bundles business, calls and Short Message Service (SMS).

They want Safaricom split into two so mobile telephony service is regulated by the Communication Authority of Kenya (CAK) and the M-Pesa division regulated by the Central Bank of Kenya (CBK).

 

Reacting to a statement sought by nominated Senator Petronilla Were of the ICT committee, the lawmakers demanded ICT Cabinet Secretary Joe Mucheru be summoned to explain Safaricom’s dominance.

Speaker Kenneth Lusaka directed the committee, chaired by Baringo Senator Gideon Moi, to invite the CS and the management of CAK to respond to the concerns. 

Were wants the committee to state what measures are in place to ensure there is a level playing field for players in the industry considering that Safaricom reached over 60 per cent market share through their voice, data and mobile money networks.

Besides, she wants an explanation of the measures taken by the Ministry of ICT, Innovation and Youth Affairs, through CAK, to declare Safaricom a dominant player, and to make the country's telecommunication sector more competitive.

“State measures, if any, to prevail upon Safaricom PLC to offer access to its transmission sites to its competitors in areas where the competitors have little or no coverage because of the dominant status that they (Safaricom) have achieved.”

Also, the committee should determine if the CBK, through the Ministry of National Treasury and Planning, can strengthen mobile money interoperability and foster financial inclusivity in the country by implementing agent and merchant interoperability.

"The market is not competitive any more. The other operators should be allowed to operate, by giving the dominant operator its right, but also allowing the others to operate, and allow innovation in the country,” Were said.

 

Murang'a Senator Irungu Kang’ata said Kenya must strive to achieve atomistic or perfect market of a competitive economy.

“In Kenya, you have a situation where one single player dictates how much you are going to pay for data bundles, for calls and Short Message Service because it controls almost 90 per cent of the market,” he said.

“In such a situation, I do not foresee any other entity growing. We are not going to create more jobs and innovation in that industry because of the dominance of one entity.”

Kang'ata held that because of the dominance, small telecommunication companies like Telkom and Airtel owe Safaricom billions of shillings.

“The effect is that the companies will forever owe billions of shillings to Safaricom and will never grow. This is not a good economic situation,” he said, reiterating that Safaricom should be declared a dominant abuser of the economy.

Kitui Senator Enock Wambua urged the CAK to explain whether Safaricom is still entirely a communication company or a banking institution.

“I would suggest that Safaricom is split into two. Safaricom the communication company, regulated by the Communication Authority of Kenya (CAK), and the M-Pesa division regulated by the Central Bank of Kenya," he said.

He said such a move would promote order in the country and enable the industry to attract more players.

“I hear many people say—I have reasons to believe that it is true—that Safaricom has become more powerful than the regulator. It is both financially and logistically too strong to the CAK,” Wambua said.