Reprieve for Safaricom as CA Drops Split Bid

The Communications Authority of Kenya dropped the bid to split Safaricom into distinct business units.

Reprieve for Safaricom as CA Drops Split Bid

The debate on whether Safaricom and M-Pesa should be split has raged since early last year. Photo: SokoDirectory

A report was presented to the CA in February last year, recommending designation of Safaricom as a dominant player in the telecommunications industry.

Designation of Safaricom as a dominant operator would have seen it separated from the lucrative M-Pesa unit, and each would operate as an independent business unit.

The split would also see Safaricom share its infrastructure with rivals.

It is for this reason that Airtel, Kenya’s second largest telecommunications company in market share, voiced disapproval over failure to split Safaricom.

Airtel noted that the move would hurt small operators. Airtel also claimed that the manner in which the CA has handled the dominance report puts its neutrality into question.

Telkom, the third largest operator by market share, also voiced their dissatisfaction with the CA’s move, noting that failure to act on Safaricom’s dominance was hurting the industry.

In a statement, Telkom noted that this is akin to having no regulation of competition in the Kenyan telecommunications industry.

On its part, Safaricom has maintained that the move to designate it as a dominant operator is meant to punish its success story.

The CA defended its move to scrap the proposal to split Safaricom, noting that there was extensive stakeholder consultation. The final report will be released by the end of this month.

Analysys Mason, a company the CA had contracted to look into the dominance issue, had earlier stated that Safaricom’s market share was unrealistically high for a three-player industry.

Safaricom’s dominance has made it difficult for new entrants to come into the market and for other operators to do profitable business.

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According to data obtained from the Communications Authority of Kenya, Safaricom controls 71.9 percent of the market by subscription.

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