Bill seeking to split mobile money from telcos faces hurdles
Parliament’s attempt to split M-Pesa from Safaricom hit a snag after MPs last week snubbed to debate on a bill seeking to compel telecom giants to separate their telecommunications businesses from mobile money lending.
Only two legislators, the sponsor, Gem MP Elisha Odhiambo included, were willing to debate the Kenya Information and Communications (Amendment) Bill as the fate of the debate remains pending.
MPs will now vote to either allow the bill to the final stage or reject it altogether.
But going by the lack of interest on the matter, Odhiambo has an uphill task convincing the MPs to approve the bill for third reading.
The Bill sought to break up Safaricom which has a dominant market share in mobile money, voice and mobile data.
According to the Competition Authority of Kenya (CAK), Safaricom controls 63.6 per cent of the mobile telephony market as of September 2020.
It is followed by Airtel at 27.2 per cent, Telkom 6.2 per cent, Finserve 2.7 per cent and Mobile Pay at 0.3 per cent.
In terms of subscribers, Safaricom leads at 39.1 million, followed by Airtel at 14.6 million, Telkom at 3.8 million, Equitel at 1.7 million and Jamii Telecom at 0.16 million subscribers as of December, 2020.
In total, Kenya has 61.4 million mobile phone subscribers with mobile money subscribers standing at 32.5 million as at December, 2020.
Safaricom still dominates the mobile money market with 27.6 million M-Pesa customers against Airtel’s 3.4 million.
While Safaricom is dominant, this position has been waning over time with its market share decreasing from 80.7 per cent in 2010 to 63.6 per cent as of September 2020.
According to CAK, a company is considered dominant if it controls a market share of 50 per cent of the market it serves or more.
However, it is only abuse of dominance that is illegal not the dominance itself.
Abuse of dominance includes predatory trade practices, exclusive contracts, margin squeezes, and discrimination, among others.
“A firm can obtain dominance through employment of innovation and efficiency (organic growth) relative to its rivals.
In addition, a dominant position may be attained through acquisition of competitors,” said CAK in memorandum to Senate in April.
Safaricom has on a number of occasions been flagged by CAK for anti-competition practices but all complaints have so far been addressed, according to the competition regulator.
These include prohibiting M-Pesa agents from transacting in competing products, excessive and discriminatory pricing of USSD services, and lack of disclosure and transparency in mobile money payments.
Samuel Nyandemo, a senior economics lecturer at the University of Nairobi, however, warns that splitting Safaricom could result in services costly services to consumers as mobile telephony and mobile money services are intertwined.
“If you separate them, that is going to bring extra costs to the users. We should allow competition to thrive without stringent government regulatory frameworks,” he said.