Kenya: Safaricom Diversifies as Rivals Complain over Dominance

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Oct 2015
Kenya, October, 19 2015 - Safaricom, Kenya’s biggest telecoms operator and largest listed company, will press ahead with diversifying its business portfolio, despite complaints from competitors that it is abusing its dominant position.

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From mobile payments to WiFi services and television set-top boxes, the company, which is 40 per cent owned by Vodafone, has been aggressively expanding into new areas to find new revenue streams and tap into Kenya’s growing middle-class.

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“As soon as you draw a line at the limit you will constrain your growth,” said Bob Collymore, chief executive. “We’re touching agriculture, we’re touching healthcare, we’re touching education, we’re touching economic empowerment. We don’t see there should be a limit in what we can do in partnership with others.”

The company is already one of the country’s largest financial services players through its M-pesa mobile money platform.

The group’s expansion has been criticised by Adil El Youssefi, chief executive of Airtel, Kenya’s second largest mobile operator. He cited the lack of access for Safaricom’s competitors to the mobile money market. Airtel commands 19.4 per cent of the market compared to Safaricom’s 67 per cent.

Mr El Youssefi said Airtel has not made a profit in the past five years while Safaricom, which has a market valuation of $5.6bn, made a net profit of Ks31l9bn ($308m) in the year to March 2015.

He also pointed to the sale by India’s Essar last year of its Kenyan mobile business yuMobile and France’s Orange talks to sell its 70 per cent stake in Orange Kenya, the country’s third-largest operator, as evidence that the market is not competitive.

“Do you think these people are not rational?” Mr Youssefi told journalists. “These people have already said, ‘Thank you Kenya, we’re no longer interested in investing in this country’.”

The Communications Authority, the country’s regulator, acknowledges there might be a problem but is declining to rule on the matter until an international consultancy has completed a market analysis of competition in the sector. This process could take up to 18 months.

Razia Khan, an economist at Standard Chartered Bank, welcomes the debate as a sign of Kenya’s maturing regulatory environment.



Source : Tech Insight
 

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