DEFENDS HUGE MARKET SHARE

Safaricom to rivals: Stop lamenting and invest in infrastructure, innovation

Telecommunication giant denies accusations of engaging in unfair competition

In Summary

• CEO Peter Ndegwa says the telco has not undertaken any activity that has crippled or in any way affected the ability of its competitors.

• Notes that Safaricom's share of the market has been decreasing year on year, which shows competition is gaining and growing.

Safaricom CEO Peter Ndegwa.
Safaricom CEO Peter Ndegwa.
Image: COURTESY

Telecommunication giant Safaricom PLC has fought off accusations it engages in unfair competition, telling rivals to invest in infrastructure and innovation.

Safaricom CEO Peter Ndegwa said the telco has not undertaken any activity that has crippled or in any way affected the ability of its competitors.

“Some of our competitors have shied away from the responsibility of building and running their own infrastructure. They do not own any base stations, they do not invest in fibre connectivity, they do not invest in call centres,” Ndegwa said on Tuesday.

He added that Safaricom's share of the market has been decreasing year on year, which shows competition is gaining and growing.

“What Safaricom has done is capable of being replicated by any company should they undertake the same level of investment and approach to customers,” he said when he appeared before the Senate Committee on Communication, Information and Innovation.

He was responding to queries on alleged monopolistic practices by Safaricom.

Ndegwa noted that in September 2000, the telco had 20,000 customers out of the total 130,000 at the time, translating to a market share of about 15 per cent.

“By 2010, Safaricom’s market share stood at 80.7 per cent but has over the last 10 years dropped to 63.6 per cent in December 2020 and now stands at 64.2 per cent as at 30th June 2021, according to the statistics published by the Communications Authority,” he said

He went on, “We did not start out at the top of the market but through great investment and innovation, we have attained our current position and with the support of Kenyans, we will continue to raise the flag of innovation and access to connectivity within and beyond Kenya”.

On October 29, rival Airtel Kenya told the committee that the information and communications technology market in the country does not enjoy fair competition.

Airtel Kenya, which is ranked second in market share among operators in the country, said there has been no dispute as to the status of Safaricom as regards its dominant status and market power.

“However, there has been reluctance in declaring Safaricom dominant in the retail mobile market and the retail mobile money market. Declaring Safaricom dominant is the first step to ensuring market competitiveness, which we believe has been the sticking point and key barrier in taking any steps to rectify any market anomalies in Kenya,” it said.

The telco's executives told the committee that Safaricom has prevented fair competition in the ICT sector.

According to the Communications Authority, Safaricom has the biggest share of the Kenya mobile telecommunication market at 64 per cent, Airtel (27 per cent), Telkom Kenya (six per cent) and others (three per cent) as at December 2020.

The company added that a notion has been perpetuated that declaring Safaricom a dominant player is punishing success, which “in our view is blatantly myopic.”

Ndegwa said Safaricom invests over Sh34 billion annually to maintain and expand its network to keep Kenyans connected and provide reliable data services. He added that Safaricom network services cover 96 per cent with 2G, 95 per cent with 3G and 94 per cent with 4G.

“We have worked tirelessly to scale access to communications in Kenya, deepen the use of internet by rolling out 3G, 4G and now 5G services, witnessed the development and growth of a global first in mobile payment platforms through M-Pesa and provided a network ecosystem in which many ICT practitioners and innovators can rely on to power their technology start-ups,” Ndegwa said.

He added that Safaricom is the largest single contributor to government taxes and has consistently been recognised as the largest corporate tax payer in Kenya for a number of years.

“In the last financial year alone, Sh105.9 billion in taxes, duties and license fees was paid by Safaricom,” he said. 

Ndegwa further said Safaricom contributes to 5.2 per cent of Kenya’s GDP, with over 6,000 direct employees of which 4,456 are on permanent terms. 

“We have about 250,000 M-Pesa agents and dealers to whom we pay significant commissions that maintain a vibrant and competitive marketplace, and these are sustained by continued innovation,” he said. 

Kitui Senator Enock Wambua asked Safaricom to work towards ensuring all parts of the country have access to their services.

“Safaricom has the muscle to make sure every corner of the country is covered. The company has the ability to take its services even to the remotest parts of the country, if it does not look at the profitability of these areas,” he said.

 

Edited by EKibii