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CAK: SAFARICOM DOES NOT HAVE MARKET POWER THUS NOT DOMINANT

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Safaricom not dominant in the market according to CAK

The Competition Authority of Kenya (CAK) has closed out the push to have Safaricom declared as a dominant player in the telecommunications market on grounds that there is no evidence that the firm is abusing its supremacy in the market.

According to the CAK Director-General, Francis Wang’ombe, Safaricom does not have market power considering that it is still threatened by its competitors.

“In the sense that you have over 50 per cent (market share) but you are still worried over your rivals pricing, means that you don’t have market power, Safaricom does not have market power because it is still threatened by the action of its competitors,” he said adding that the firm has attained it’s position due to their innovative products.

Airtel had last month sought to the Communication Authority (CA) to declare Safaricom as a dominant player so that the playing ground could be levelled.

Communications Cabinet Secretary, Fred Matiang’i, also backed Airtel’s push and had even wrote a letter to the CA last year asking why Safaricom had not been declared a dominant provider and demanded a brief on what the watchdog was doing in preparation to declare Safaricom a dominant player.

“The Kenya information and communications Act section 84W gives the Communications Authority of Kenya powers to declare a service provider to be dominant if their market share is at least 50 per cent of the relevant gross market segment,” Mr Matiang’i noted.

“This is therefore to request you to provide information on the consideration of the exercise of your powers as provided for in the Act, to address the issue of dominance in the telecommunications sub-sector of our industry. I look forward to your prompt advice on this matter.” Read the letter in part. The letter was addressed to CA Director-General Francis Wangusi and copied to his chairman, Mr Ben Gituku.

If Safaricom was to be declared dominant, it would mean that the firm would be forced to operate in a more restricted business environment which could possibly see the firm split into three independent entities, which would work to the advantage of other players in the telecommunications industry like Airtel and orange.

CUT INVESTMENTS

Safaricom’s CEO Bob Collymore had expressed fears that the firm would be forced to cut its USD400 million investment earmarked for this year in the event that they were declared dominant.

“Something that I think should concern Kenyans is this apparent arbitrary declaration of dominance, and this apparent attempt to reduce the size of what is an African champion,’ Collymore said.’It is the prudent management of the company that brings the returns that we have been bringing back to our shareholders but also to help us to invest in this company.

Currently Safaricom controls 75.6% market share in Voice, 93% in SMS, 70% data and 66.7% in mobile money.

In July Last year, Safaricom bowed to pressure from Airtel and opened up its vast M-pesa agents to its rivals, which allowed for integration between various mobile money platforms.

 

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