Kenya refuses to break up mobile money pioneer

2017-03-06 10:46 - Bloomberg: Bella Genga
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Nairobi - Kenya’s government opposes using regulation to force East Africa’s biggest mobile operator  Safaricom to be broken up, after a draft study found the company is dominant in the country’s telecommunications industry, Information, Communications and Technology Secretary Joseph Mucheru said.

The government disapproves of measures that would stifle innovation as it wants companies to expand by investing in new products and technology, Mucheru said in an interview Friday from the capital, Nairobi.

The country has existing laws that can be used to stimulate competition without having to introduce new regulations, he said.

A draft report by UK advisory group Analysys Mason commissioned by Kenya’s regulatory Communications Authority found that Safaricom is a dominant player in the mobile-money and mobile communications sectors and recommended that, unless steps are taken to improve competition, the company should be broken up.

Analysys Mason declined to comment, referring all queries to the regulator, which said it’s reviewing the study as it considers steps to enable Safaricom’s rivals to compete better. Safaricom is 40% owned by Newbury, England-based Vodafone.

“As the government, we do not support regulation that splits companies based on innovation,” Mucheru said.

“To say that any company that innovates something - they are likely to be penalised by law - I believe, is unfair.”

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Safaricom is Kenya’s biggest mobile provider with a 69% market share, according to the Communications Authority. Its closest rival is the national unit of Bharti Airtel, with 17.5%, while it also competes with Helios Investment Partners LLP-owned Telkom Kenya.

‘Punishing Innovation’

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