[kictanet] Safaricom battling pricing power with CA

Hezron Gikanga Hezron.Gikanga at thearcrayon.com
Tue Jan 25 09:20:56 EAT 2022

Ali & everyone else, thanks for the insights, and illuminating questions.
My perspective below (+disclosures).
Hez Gikang’a

From: KICTANet <kictanet-bounces+hezron.gikanga=thearcrayon.com at lists.kictanet.or.ke> on behalf of Ali Hussein via KICTANet <kictanet at lists.kictanet.or.ke>
Reply to: Kenya's premier ICT Policy engagement platform <kictanet at lists.kictanet.or.ke>
Date: Tuesday, 25 January 2022 at 08:11
To: Hezron Gikanga <Hezron.Gikanga at thearcrayon.com>
Cc: Ali Hussein <ali at hussein.me.ke>
Subject: Re: [kictanet] Safaricom battling pricing power with CA

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. (there are several studiesconducted  on the state of competitiveness in the industry over the last decade plus, across different market segments, and when I was at Airtel Africa a decade ago, this is one of the ‘internecine wars’ we fought – both against the Regulator CA (whom I firmly believe isn’t fair), and against the dominant player then. A groundbreaking Analysys Mason  report back then was edited to soften some of the findings, and so nothing was (effectively done) to rein some of the predatory and abusive practices (in the name of GoK-ownership and ‘free/fair competition). There are also comparative studies from other markets, tests, and models to go by..…I doubt that there was goodwill/political willpower to effect some of the changes..case in point is that several draft pieces of legislation/amendments have been brought by individual legislators for a ‘market-correction’..they haven’t gone far..will Ezra Chiloba et al succeed now? Time wll tell..

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? Good question. Refer to above. And the question of independence of the Regulators (not just CA and CAK) from undue political influence & fatalistic nationalistic tendencies….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? Yes, re the market segments looked at, and the inevitable nature of the evolution/march of the tech revolution…Has a study been done on what percentage of the voice market is going to VOIP? Do the technocrats in the Regulatory space have requisite skillsets and motivation to grasp the business models, workings of the industry, and import of their determinations? For the sake of argument, revisit the debate on distributed ledgers/block-chain….

3. Are we fighting the wrong war? Maybe. Reframe this to focus on the benefits for the consumer, and industry, if we are to truly be the ‘silicon savanna’ that we aspire to

4. Last but not least how do we as a country reason out without going to court? Alternative Dispute Resolution (ADR) works, but where all parties have faith in both the dispute resolution process/mechanisms, the competency and ‘agnosticism’ of the adjudicators and in the enforcement of the decisions reached. Without that the courts remain the only viable option for aggrieved parties (at the risk of falling out of favor with the Regulators et al..)

My two cowrie shells.


Ali Hussein

Fintech | Digital Transformation

Tel: +254 713 601113

Twitter: @AliHKassim

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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<mailto: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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