Safaricom let off the hook by UK regulation consultants

17 Aug 2010

Safaricom, Kenya’s largest cellco by subscribers, has been vindicated in its battle against stringent new regulations introduced by the Communications Commission of Kenya (CCK). After Safaricom threatened the regulator with legal action, information minister Samuel Poghisio hired UK consultancy firm Frontier Economics to review the country’s new competition rules. According to documents viewed by Business Daily, Frontier Economics found key aspects of the contested rules to be out of line with international best practices, and recommended that they be revised or struck out altogether.

Citing the European Commission’s telecom sector competition rules – which stipulate that a player must have at least 40% to 50% of market control to be declared dominant, rather than the 25% figure used in Kenya – Frontier Economics has now placed a heavy burden of proof on the CCK if it intends to act against Safaricom’s dominance. Further, the British consultants have suggested that the CCK cut the 90 days notice clause regarding new tariffs to 30 days, reducing the chance of Safaricom being upstaged by its smaller rivals. In addition, Frontier Economics suggests that the CCK should lose the power to adjust tariffs independently, recommending that the watchdog should advise the operator about proposed changes without being specific about the mooted tariffs. According to TeleGeography’s GlobalComms database, Safaricom controls 81.5% of the Kenyan wireless market.

Kenya, Safaricom