International

Kenyan Regulatory Plan To Divide Safaricom Abandoned

It looks like Safaricom will survive as a single business — Kenya’s telecom regulator has reportedly backed off a plan that would have seen the firm’s financial services and telecommunications functions divided off from each other.  The move has been considered due to Safaricom’s massive size at present.

The move was also the recommendation of a report on competition in the sector that leaked last year after it had been circulated for commentary. The report explicitly recommended that Communications Authority of Kenya (CA) break up Safaricom, the biggest firm in Kenya by market value.

The CA has affirmed it has no intention of breaking up Safaricom — or any other firms, at present — following a massive and unhappy outcry from the public in the aftermath of the leak.

Safaricom is much larger than its two main competitors in the local mobile market with 29.4 million users, 71.9 percent of Kenya’s total market. It is 35 percent owned by South African group Vodacom and 5 percent by Vodacom’s major shareholder Vodafone.

Smaller operators — like local subsidiary of India’s Bharti Airtel and Telkom Kenya, owned by London-based Helios Partners — have argued that Safaricom enjoys a dominant position because it is can leverage its strength as a telecom provider in ways that no other mobile firm can. Safaricom rejects that claim and has argued previously that the regulator cares more about helping its smaller rivals rather than improving consumer access to financial services technology.

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