Dominant Player: Are Days Numbered For Safaricom’s Monopoly In Kenya?

Written by Dana Sanchez

Safaricom, East Africa’s largest mobile-phone operator, says proposed legislation seeks to punish the company for its dominant market share, and the legislation was drafted without its input, Mail&Guardian reports.

Proposed new rules will penalize any telecommunications company with a market share of more than 50 percent, requiring them to tell rivals when they plan to raise their prices, according to Safaricom. They’ll also allow the Kenyan regulator to label a company dominant if it earns “super-normal” profit.

Safaricom enjoys a 67-percent share of Kenya’s mobile market. The company is 40-percent owned by U.K. carrier Vodafone, and is East Africa’s largest company by market value, Mail&Guardian reports. It controls about 75 percent of mobile-money transfers through M-Pesa, a mobile payment system. M-Pesa earned $263 million in revenue for Safaricom in 2014.

M-Pesa has competition from rival Bharti Airtel. Airtel Kenya and Equity Group, Kenya’s largest bank by customers, jointly started Equitel earlier this year, dropping transaction charges as a way to tap into M-Pesa’s market share.

Safaricom welcomes “healthy competition,” said Stephen Chege, corporate affairs director for Safaricom.

Commenting on first-quarter results for Bharti Airtel, Africa CEO Christian de Faria said in a Exchange4Media report, “I am particularly delighted to report that 7 million Airtel Money customers are transacting more than $1 billion of money every month.”

Kenya’s Attorney General Githu Muigai told the Information, Communication and Technology Ministry to withdraw the draft law from debate in parliament because his office wasn’t consulted prior to its submission, the Nairobi-based Business Daily newspaper reported.