"Declare dominance, but do not punish success..."
This has been @SafaricomPLC rallying call each time @CA_Kenya attempts to intervene in the Kenyan telco sector that has been dominated by Safaricom in the better part of the last decade - Walubengo
This has been @SafaricomPLC rallying call each time @CA_Kenya attempts to intervene in the Kenyan telco sector that has been dominated by Safaricom in the better part of the last decade - Walubengo
.@SafaricomPLC, with its flagship product MPESA, has without doubt transformed lives and put Kenya on the global map where financial and digital inclusion is concerned.
Why would anybody, particularly @CA_Kenya, want to slow down @SafaricomPLC and take away its shine under the guise of promoting competition?
This seems to be @SafaricomPLC view each time @CA_Kenya attempts to correct what is obviously a market failure within the sector.
A market failure is said to have occurred when there is no effective competition, there are high barriers to entry or there are inadequate laws to deal with market failure.
In the case of Kenya, lack of effective competition seems to be the issue, with @SafaricomPLC competitors always getting the brunt of its superior marketing, entrenched product scope and wider geographic reach across the country.
Indeed @SafaricomPLC has no apologies to make for this since they have invested heavily in infrastructure across the country and have every right to reap the benefits.
But beneath this reality is the stubborn fact that for better or worse, the Kenyan economy is powered by @SafaricomPLC or MPESA, its money transfer service.
The latest regulatory reports by @CA_Kenya show that during the last quarter, of the close to Kes2T exchanged over mobile money platforms, more than 77% was transacted by @SafaricomPLC MPESA.
This maybe great business for the @SafaricomPLC shareholders, but it remains a risky business for a whole economy of a nation to be dependent on the success or otherwise of a single multinational.
In other words, the spectacular success of @SafaricomPLC is simultaneously and potentially a single point of failure for the Kenyan economy.
Perhaps this is the perspective @CA_Kenya is taking, rather than one of intending to punish an otherwise successful company. However, the regulatory options for managing this single point of failure seems to be drying up over the years.
Initially, @CA_Kenya introduced something called mobile number portability, where subscribers could move to competing telco providers while retaining their regular or original mobile number.
However, number portability was and remains a massive failure, with less than five hundred subscribers out of the potential 40M subscribers taking advantage of this feature every quarter.
The potential number portability users prefer to stick with the more expensive @SafaricomPLC services due to the need to continue using its more versatile, cross-industry and geographically spread MPESA service.
.@CA_Kenya then introduced mobile money interoperability, which allows subscriber to receive money directly into their mobile wallets – irrespective of the origin or source of the sending provider network.
The jury is still out on the success of this feature. However, the impact is likely to be subdued to the fact that cashing out the received money is still restricted to the parent subscriber network or mobile money agents.
With 150K+ mobile money agents spread across the country, @SafaricomPLC agent network is five times bigger than its closest rival. So unless the highly contentious ‘mobile-money-agent-interoperability’ is effected, mobile money interoperability may not live to its huge promise.
Most recently, @CA_Kenya has been toying with the idea of declaring @SafaricomPLC a dominant player with a view to kicking in the subsequent stringent regulatory controls. This would include tighter restriction on tariff regime, promotional activities, infrastructure sharing etc
It is unlikely that this will result in the desired regulatory outcomes since such approaches work best in a traditional telco market setting, but may actually be counterproductive in an Internet -driven or platform-based Telco markets.
It seems therefore that @CA_Kenya may continue staring at the big, green elephant in the room, but may not be having the right regulatory interventions on how to tame it.
It now seems like @CA_Kenya is running out of options on how to correct the telecommunications market sector where @SafaricomPLC is now a dominant player bit.ly/2x3lwLI
