Report proposes breakup of Safaricom to level playing field

1 Mar 2017

A report compiled by Analysys Mason has proposed that Safaricom, Kenya’s largest mobile operator by subscribers, be broken up to reduce its dominance in the country’s telecoms market, according to local newspaper Business Daily. The leaked draft report, which was commissioned by the Communications Authority of Kenya (CA) to examine competition in the sector, recommends the separation of Safaricom’s core telecoms operations from its mobile financial services business M-Pesa, in order to level the playing field. ‘The two businesses would be required to operate in separate offices, with separate staff below board level, separate branding, separate accounting and separate business operations and support system, customer support systems and management information systems,’ the newspaper cites the report as saying.

In addition, the report proposes that Safaricom should provide 2G, 3G and 4G roaming on its network through regulated tower sharing for a period of five years, and recommends that the operator should provide justification that a planned new tariff, loyalty scheme or promotion can be replicated by a reasonably efficient operator at least five days before launching it. Safaricom held a wireless market share of 73.3% at the end of September 2016, according to the CA, with competitors Airtel Kenya and Telkom Kenya following with 18.6% and 8.1%, respectively.

Responding to the report, Safaricom’s CEO Bob Collymore told news agency Reuters: ‘It’s a malicious act to leak such a damaging report without first consulting or at least sharing it with us,’ adding that the report would undermine foreign investors’ confidence in the East African country as an investment destination. For its part, the CA said the draft report was still undergoing internal review, and would be discussed with mobile operators in Kenya before Analysys Mason prepared the final version.

Kenya, Safaricom