Safaricom’s Market Dominance Stifling Competition, Unhealthy For Industry Growth


Reports are rife that Safaricom could be using its dominance in the market to suffocate other market players and stifle competition, after realising that the competitors are eating into its market share.

According to Communication Authority of Kenya (CA) report, Safaricom’s market share dropped to 65.4 per cent from 72.6 per cent in June last year.

A 2015 report wanted Safaricom declared dominant player, a move that would have seen its voice and mobile money units split into stand-alone businesses that would compete with rival telecommunications firms.

However, the recommendation did not see the light of the day and the status quo remained, even as Safaricom continued suffocating other players and exploiting Kenyans, most of whom are subscribers to the network.

The dominance has seen Telkom Kenya‘s market share stagnate at 7.6 while Airtel has gained slightly to 23.1 per cent. Youthful entrant Equitel’s market share stands at 0.5 per cent.

Read: Safaricom’s Deep Pockets is Enabling it to Exploit Subscribers

This has sparked a sharp debate about Safaricom’s dominance, which the regulator seems not to care about.

The latest to show his dissatisfaction is Telkom’s newly appointed CEO Mugo Kibati. Kibati is feeling the heat within a week to his appointment.

A report by UK-based advisory group Analysys Mason found Safaricom to be a dominant player in mobile money and mobile communications. It recommended the company open up its mobile-money platform known as M-Pesa to transfers from competing services at prices determined by the regulator. It also proposed that the company be broken up if competition doesn’t improve.

In light to the report, Kibati says that for players to make a return on investments, the report should be implemented.

Kibati says that Safaricom (which he did not name), has been able to cheat the authorities and created a virtual monopoly.

“You have a virtual monopoly. It is not customers or the consumer who is king, the operator is king. The finding on dominance in that report (Analysys Mason) should be a starting point; we should operate in more competitive and fairly more regulated space,” said Mr Kibati.

Kibati points out dominance by Safaricom as the major challenge hindering other competitors from making return on investments.

“Ours is the most concentrated market in the world in the telecoms industry; we shouldn’t punish success, yes, but we need to address what is a virtual monopoly; we only want to see everybody else making a return on what they have invested. With market concentration the end user is disadvantaged. Regulations across the world have recognised dominance and gone ahead to address it,” he said.

In September, Airtel, which is the second largest telco in Kenya hinted at exiting the Kenyan market if new regulations are not passed to curb Safaricom’s dominance.

This will leave the country with one dominant player and other very weak players, leading to uncontrolled market. The most probable occurrence in such a situation is a spike in prices, exposing the consumer to further exploitation.

“We have been trying for over five years and have not made one dollar in profit. Airtel is likely to exit Kenya if the market structure is not addressed in terms of dominance,” said Airtel chief executive Adil El Youssefi.

Despite the Analysys Mason report saying that Safaricom did not abuse its dominance status, it is practically evident that subscribers are unwillingly being confined to one service provider, with exorbitant prices.

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Written by Kahawa Tungu


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