[kictanet] AG BLOCKS ICT CS' BID TO ENACT ANTI-SAFARICOM LAW

[Ali Hussein]

Walu

Regulation must continue and it must ensure that a level player field continues to exist. Breaking up a company however is not the answer. 

The experience in other markets suggest that for example a blanket declaration of dominance may not be the answer. So if you take the example of Nigeria when they took action against MTN they zeroed in on the Mobile Voice Market. Let’s see something like that implemented. Lets break down this dominance thing into the different segments and let’s have corrective measures.

This issue of insisting that Safaricom must be ‘Balkanised’ (OK! I’m using that word liberally!) :-) is just missing the point. The Market will handle that. It invariably does. We don’t need Government Apparatchiks breaking up companies because they think they are Dominant. Someone ask them to spell Microsoft, Google, Intel, AT&T, Standard Oil and others before them and see how this will pan out.

Here below are some interesting cases of how other markets have dealt with the dominance issue. The conclusion is simple:-

Experience of Other African Countries on dominance law

Recently Nigeria Communications Commission declared MTN Nigeria and Globacom dominant following a study conducted by KPMG Professional Services. MTN was declared dominant in two market segment-Mobile Voice Market and Wholesale leased lines and transmission capacity whereas Globacom (Nigeria’s second National Operator) was declared the leader in wholesale leased lines and transmission capacity market.

In its determination, Nigeria Communications Commission found that the mobile voice market was not effectively competitive and therefore ordered MTN (which has 44% of the mobile voice market) to charge same amount for on-net and off-net calls.

The table below shows African telco markets where Airtel, MTN and Orange have been declared dominant since 2012.

Country in Africa	Name of Dominant Operator in country		Market Share of Dominant Operator		Year 

Nigeria			MTN								44%									April 28, 2013

Congo B			MTN								40%									March 2013
	
				Airtel 								38%									March 2013

Niger			Airtel								61.4%								2013

Chad			Airtel								53%									2013

Rwanda			MTN								57%									2013

Burkina Faso		Airtel								39.24%								2012
				Telmob								38.36%								2012

Senegal			Orange								62.06 %								2012

Gabon			Airtel								45%									2013




It is noteworthy that Safaricom has more market share than most of the operators declared dominant as per the table above. However no one is advocating for the break of the Telcos. 

Other similar experiences around the world

In early 2014 America Movil and its operating subsidiaries- Telecel (Mexico’s wireless market leader) and Telemex (the dominant fixed line player) were declared by the IFC as a dominant economic interest group in the telecommunications market.

Telecel’s market share at the time stood at 69 % and Telemex’s market share stood at around 85%.  The market concentration stood at 6382 points on The Herfindahl index (also known as Herfindahl–Hirschman Index, or HHI) with Mobile Market standing at 5334 point and the fixed telephony market stood at 4761 points on the HHI. According to the IFT a HHI score of more than 2000 points can affect competition.

As can be noted abiove, the HHI scores are very much in line with the market concentration levels in Kenya.

The regulator subjected them to the following regulations on the wholesale level:

·         Asymmetric interconnection rates

·         Access to passive infrastructure

·         Local loop unbundling

·         Mandatory National roaming Access

The regulator subjected them to the following regulations on the retail level:

·         End to SIM locking of handsets

·         All services sold in bundles were required to be sold separately

·         Certain retail prices were to be reviewed.

So looking at these cases worldwide I would like us to review the so called Anti-Safaricom Laws to enable us comment further. Anyone has a copy of the draft laws that the AG is talking about?

Thanks & Regards

Ali Hussein
ali at hussein.me.ke

+254 770 906375
Twitter: @AliHKassim
Skype: Abu-Jomo
LinkedIn: http//ke.linkedin.com/in/alihkassim
Blog: www.alyhussein.com

> On Aug 6, 2015, at 9:23 AM, Walubengo J <jwalu at yahoo.com> wrote:
> 
> Very interesting. My quick take.
> 
> 1) AG move simply postpones the problem.  That is assuming the CS had consulted him on the regulations, would he have subjected the same to the awaiting  'tyranny of numbers?' in parliament?
> 
> 2) The regulations are not perfect (am trying to avoid the word faulty:-),  However their intentions are timely and spot on.
> 
> End result?
> 
> Kenyans are no better off than when the fight started with the green elephant smiling at the turn of events :-)
> 
> walu.
> 
> 
> 
> From: Ali Hussein via kictanet <kictanet at lists.kictanet.or.ke>
> To: jwalu at yahoo.com 
> Cc: Ali Hussein <ali at hussein.me.ke> 
> Sent: Thursday, August 6, 2015 6:50 AM
> Subject: [kictanet] AG BLOCKS ICT CS' BID TO ENACT ANTI-SAFARICOM LAW
> 
> Listers
> Apologies for cross posting.
> This discussion seems to have refused to die. :-)
> My humble contention is again that Market Forces and a gentle regulatory hand will be better than this poison pill that the CS seems determined to shove down Safaricom's throat.
> As for the regulators, the fact that two govt agencies seem at loggerheads on this issue can only augar well for this country - Competition has checked into Government! :-)
> One last thing - I'm curious as to the Market leadership status at Airtel's other Africa presence. Anyone has those stats at hand?
> http://www.businessdailyafrica.com/AG-blocks-Matiangi-s-bid-to-enact-anti-Safaricom-laws/-/539546/2820120/-/en82p6z/-/index.html <http://www.businessdailyafrica.com/AG-blocks-Matiangi-s-bid-to-enact-anti-Safaricom-laws/-/539546/2820120/-/en82p6z/-/index.html>
> Ali Hussein 
> Tel: +254 713 601113
> 
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