[kictanet] Safaricom battling pricing power with CA

[Mwendwa Kivuva]

On Tue, 25 Jan 2022 at 08:09, Ali Hussein <ali at hussein.me.ke> wrote:

> Kivuva and listers
>
> This is a very interesting case and could probably serve as a case study
> worldwide. At this point in time I have more questions than answers:-
>
> 1. The Telco sector is an interesting one. Where do we draw the line
> between Market Power, abuse of Market Power, Free Markets, centralized
> control of power by Regulators? I can go on and on.
>
> 2. I can't help but wonder whether the current regulatory environment is
> fit for purpose and whether the Telcos themselves are stuck in the '80s and
> the regulator with them? Isn't it time to take into consideration that the
> cheese is moving or has moved and that VOIP-type services have eaten into
> the traditional voice market and these guys continue to fight for what's
> remaining of the market? Has a study been done on what percentage of the
> voice market is going to VOIP?
>
>
It is in the current numbers. Safaricom earns an estimated Sh6.5 billion
annually from MTR while paying out Sh2.6 billion to rivals, leaving it in a
profitable position while competitors remain in a net loss. The business
will eventually move through evolution. As for now, it seems we the clients
still love voice calls.


> 3. Are we fighting the wrong war?
>
> 4. Last but not least how do we as a country reason out without going to
> court?
>

Its the  Communications And Multimedia Appeals Tribuna.

>
> My two cowrie shells.
>
> Regards
>
> *Ali Hussein*
>
> Fintech | Digital Transformation
>
>
> Tel: +254 713 601113
>
> Twitter: @AliHKassim
>
> Skype: abu-jomo
>
> LinkedIn: http://ke.linkedin.com/in/alihkassim
> <http://ke.linkedin.com/in/alihkassim>
>
>
>
>
> Any information of a personal nature expressed in this email are purely
> mine and do not necessarily reflect the official positions of the
> organizations that I work with.
>
>
> On Mon, Jan 24, 2022 at 9:20 PM Mwendwa Kivuva via KICTANet <
> kictanet at lists.kictanet.or.ke> wrote:
>
>> Safaricom has a huge pricing power in voice services, making it difficult
>> for rivals Airtel Kenya and Telkom Kenya to compete with it, the
>> Communications Authority of Kenya (CA) has said.
>>
>> The regulator made the disclosure in its response to a case filed by
>> Safaricom at the Communications And Multimedia Appeals Tribunal seeking to
>> stop CA from cutting the mobile termination rate (MTR) per minute to Sh0.12
>> from Sh0.99.
>>
>> MTRs are the charges levied by a mobile service provider on other
>> telecommunications service providers for terminating calls on its network.
>>
>> Safaricom argues that the reduction of the charge, which was to take
>> effect at the start of this year, ignores the cost of doing business in the
>> telecommunications industry.
>>
>> The regulator responded by stating that the leading telco has the lowest
>> cost of operations, allowing it to run promotions at prices below the MTR
>> and which its rivals are not in a position to match.
>>
>> Safaricom’s leading market share has seen it charge its rivals more than
>> it pays out to them, leaving it in a net profitable position.
>>
>> More ...
>> https://www.businessdailyafrica.com/bd/corporate/companies/safaricom-pricing-power-revealed-in-tariff-battle-3691550
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