[kictanet] Consumer protection a means of cutting Safaricom’s dominance

Wed Feb 22 05:27:00 EAT 2017

Hi colleagues,

I need an explanation like a two year old on this whole dominance
debate. Maybe Walu can help me here. Safaricom was a subsidiary of
Telkom Kenya focused on the mobile phone (GSM) Segment. Looking back
into the past and as a result of Liberization, the then giant Kenya
Posts and Telecommunications Corporation was split into , Telkom
Kenya, Communications Authority of Kenya (CCK then as the regulator
and Posta to handle the post office. We need to step back and
interrogate the real reasons as to why Progress of Telkom Kenya and
Posta has backfired in a maximum of ten bullet points. On the other
hand, we also need to figure out how Safaricom (a subsidiary of Telkom
Kenya which is now a public company bolted out of the stable and
became a success). My simple questions:

1. Will a split of Safaricom yield the desired effect?
2. Is it in the interest of Safaricom (the company or organization
that is a legally recognized person by the laws of the land to split
so as to suit the competition.
3. Can someone share case  studies of where this has worked before?

Walu or anyone as old as Kenya Posts and Telecommunication Corporation
please help.

Following...

On 2/22/17, Ali Hussein via kictanet <kictanet at lists.kictanet.or.ke> wrote:
> @Mwendwa and all
>
> it looks like that's what the consultant is suggesting.
>
> Here are two other excerpts from the report that I find interesting:-
>
> The most draconian of the prescriptions is the proposal to functionally
> separate M-Pesa from Safaricom. This is tantamount to proposing a break-up
> of Safaricom because in terms of growth revenues, M-Pesa is on track to
> reach 50 per cent of the company’s net revenues. The consultants have also
> proposed what they call “mandatory wallet-to wallet interoperability”, a
> system where a consumer can keep cloud accounts across the platforms of
> different mobile companies, making it possible to move and shift money
> between accounts as one chooses.
>
> I have said before and I'm happy to repeat this again. Separating M-Pesa
> from Safaricom should not be forced on Safaricom. In my humble opinion
> Safaricom should by now have done this voluntarily as a strategic imperative
> to transform itself into the De-Facto National (Regional) Mobile Payment
> System. I think the lost opportunity here can be seen by the KBA launching a
> rival Mobile Platform called PesaLink.
>
> The mandatory 'Wallet to Wallet' interoperability is an interesting angle
> and needs to seriously be considered. This sort of compliments my point
> above.
>
> They have also recommended a system that they call “agent to agent
> interoperability”, where agents will be able to support multiple mobile
> money platforms using what is described in technical language as “a single
> float”.
>
> This is certainly interesting. In as much as this supports the notion of
> 'User or Customer Experience'  I think the Regulator and the Telcos should
> work towards ensuring this becomes a reality. In essence this could be a
> solution to the allegations that Safaricom discourages its agent network
> from dealing with rival Telcos.
>
> Lastly, I would largely concur with Jaindi Ksero's conclusion (sort of) that
> the Consultant has displayed a lack of knowledge in the functioning of our
> national payments system. I would however like to add one for the road:-
>
> Are our Regulators (CA, CAK and CBK)  prepared to empower, grow and regulate
> with a light touch the seemingly fluid Telco, Banking, Payments and Fintech
> Spaces while ensuring that:-
>
> a) They embrace innovation and new thinking while protecting National
> Interests and consumers at the same time?
>
> b) They work together without resorting to Turf Wars as evidenced in the
> tiff between the CA and the CAK in 2015.
> http://www.businessdailyafrica.com/Corporate-News/Competition--telecoms-watchdogs-to-seek-truce-over-Safaricom-/539550-2707286-lqu5sez/index.html
>
> c) They consider creating a Joint Task Force to monitor, encourage and
> empower players in the spaces mentioned to become Regional and Global
> Players? I have often wondered aloud about the CBK's core mandate of
> protecting Depositors' funds and wondered (again aloud) whether this mandate
> is outdated and that it should be expanded to that of becoming an empowering
> public entity that encourages research, innovation and entrepreneurship in
> the burgeoning convergence of Banking, Telcos, Payments and Fintech Spaces.
> d) Regulatory tools need to be rebooted and upgraded to reflect the times.
> The current scenarios are such that one doesn't even know anymore which
> industry one operates in.
>
> This is a plea for the Regulation Mandates to drastically change and embrace
> the now and the future.
>
> Can the Future Czars step up?
>
>
> Ali Hussein
> Principal
> Hussein & Associates
> +254 0713 601113
>
> Twitter: @AliHKassim
> Skype: abu-jomo
> LinkedIn: http://ke.linkedin.com/in/alihkassim
>
> "We are what we repeatedly do. Excellence, therefore, is not an act but a
> habit."  ~ Aristotle
>
>
> Sent from my iPad
>
>> On 21 Feb 2017, at 11:12 PM, Mwendwa Kivuva via kictanet
>> <kictanet at lists.kictanet.or.ke> wrote:
>>
>> So technically, we want to break up Safaricom so that these companies
>> can gain some traction  "Airtel, has made cumulative debt to date of
>> Sh51 billion, according to latest audited accounts for the financial
>> year 2015. Indeed, in the league of loss makers, only Kenya Airways,
>> with their Sh54 billion lost in the most recent years, compares to
>> Airtel. As a matter of fact, the numbers in the company’s annual
>> accounts show that Airtel is insolvent and only surviving on life
>> support from the parent company in India. Safaricom’s only other
>> rival, Orange Telkom, has gone through exceedingly difficult trading
>> and financial conditions over the past decade. This a firm that is
>> technically insolvent. It has gone through several episodes of
>> restructuring that have not materially changed its circumstances."
>> ______________________
>> Mwendwa Kivuva, Nairobi, Kenya
>> twitter.com/lordmwesh
>>
>>
>>
>>
>> On 21 February 2017 at 23:48, Grace Githaiga via kictanet
>> <kictanet at lists.kictanet.or.ke> wrote:
>>>
>>> Jaindi Kisero gives us a glimpse of the competition study in the
>>> telecommunication sub-sector undertaken by Ms Analysys Mason on behalf
>>> of
>>> CA. See full article:
>>>
>>> "I recently came across a report by the consulting group Analysys Mason
>>> entitled "A telecommunication competition market study in Kenya".
>>> Readers
>>> will recall that these consultants were retained by the market regulator
>>> –
>>> the Communications Authority of Kenya – to conduct a study whose results
>>> were to inform the crafting of a new framework for regulating abuse of
>>> market dominance by the big players.
>>>
>>>
>>> As expected, one of the key findings of this study is that Safaricom’s
>>> market share in both the mobile communications and mobile money segments
>>> far
>>> exceed the thresholds where firms are typically presumed to be
>>> dominant."
>>>
>>>
>>> http://www.nation.co.ke/oped/Opinion/consumer-protection-a-means-of-cutting-safaricom-dominance/440808-3822560-jsmlpbz/index.html
>>>
>>>
>>>
>>> Best regards
>>>
>>>
>>> Githaiga, Grace
>>>
>>>
>>> Co-Convenor
>>> Kenya ICT Action Network (KICTANet)
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>> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
>> for people and institutions interested and involved in ICT policy and
>> regulation. The network aims to act as a catalyst for reform in the ICT
>> sector in support of the national aim of ICT enabled growth and
>> development.
>>
>> KICTANetiquette : Adhere to the same standards of acceptable behaviors
>> online that you follow in real life: respect people's times and bandwidth,
>> share knowledge, don't flame or abuse or personalize, respect privacy, do
>> not spam, do not market your wares or qualifications.
>

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