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Has Safaricom monopolized the telco market?

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TelecomKenya has been independent for over 50 years now, and its citizens have continued to enjoy numerous benefits of improved quality of life in several areas that make life better and enjoyable and more rewarding.

The sheer ability to reach and to be reached and to connect with others socially and in business ranks high amongst the drives for development in Kenya and elsewhere in the world. It has been said in several forums, studies and analyses that telecommunications services are one of the key enablers of development, driving up the GDP of a nation.

Looking back at Kenya fifty years after independence, not all of the 43 million Kenyans can claim to enjoy telecommunications services in the country even with the advent of mobile communications to supplement the landlines over 14 years ago. And even those who have access to the services still register their dissatisfaction with the quality of the services offered by the operators.
The sector has also been fraught with several issues relating to the actual and perceived quality of the services offered by the operators ranging from network availability to lack of clarity of calls to dropped calls to lack of customer service and resolution of customer issues.

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The Communications Commission of Kenya (CCK) reports a mobile penetration of 76.9%, with a total of 31.3 million mobile telephone subscribers in its latest report released in April 2014. Safaricom Limited recorded the largest share of 67.9 per cent; Airtel Networks Limited followed with 16.5 per cent, Essar Telecom (Yu Mobile) registered 8.5 per cent and Telkom Kenya (Orange) record 7.2 per cent.

A key component of the evolution of communications services remains the access to mobile banking services by holders of mobile accounts with the telecoms companies with the CCK report indicating a total of 26 million subscribers to the mobile money transfer service, with Safaricom leading with the lion’s share of the subscribers in excess of 95 per cent. Safaricom, definately is the country’s telecoms poster boy.

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One would beg to wonder why there is a skew to one operator, especially with the huge disparity in market shares between the number one and number two operator and also throw some light on the quality and service provision issues plaguing the sector.
One would go on to wonder if the issues of quality, national availability and service gaps are driven solely by industry dynamics or bay lack of strong competition or poor regulatory policies in the market, and if so then what needs to be done to improve the service these to the benefit of the population of Kenya.

Commonplace information in the market indicates that some of the operators with low market share like Orange and Yu Mobile are contemplating throwing in the towel citing huge and unsustainable costs of running their operations against low number of subscribers and revenues while the largest operator Safaricom continues to post high profits and returns, leading many companies not only in Kenya but also in East Africa. In fact, Safaricom and Airtel have bided to buy out the operations and subscribers of Yu Mobile in the planned exit. Just across the border, Orange Uganda yesterday called it quits. It was not the first, Warid Telecom sold out earlier.

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There have also been some new developments with the planned entry of Mobile Virtual Operators into the market, making the future dynamics and outcomes of the industry even more uncertain. One would then go on to wonder what would happen if these two operators were to exit the market leaving just Airtel and Safaricom to the market? Would it further the dominance of one operator to the detriment of the other and the experience of the customers? Would this be harmful to the industry and the economy of the country at large?

All in all, might there arise an immediate need for the review of the rules and regulations in the industry by the regulator especially to address the future of the industry and the investments thereof?

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Sam Wakoba
Sam Wakobahttp://techmoran.com
Taking you on tour through Africa's tech and business ecosystem, one story at a time since 2010! Based out of Nairobi, Kenya, Sam is the founder and managing director of Moran Media, which runs  TechMoran.com, various other digital platforms and a startup incubation hub for Kenya's youthful entrepreneurs. Drop me a mail at [email protected]

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