Safaricom Plc received a show of support from Kenya’s antitrust regulator as the country’s largest company battles to convince lawmakers that its market leadership in mobile subscriptions isn’t shutting out competitors.
The carrier part-owned by Johannesburg-based Vodacom Group Ltd. controls more than two-thirds of the market in East Africa’s largest economy, while its M-Pesa mobile-payment service accounted for 80 per cent of the country’s transactions in the three months through March. Safaricom has been under political pressure since a report last year by UK-based advisory firm Analysys Mason recommended price controls and that the company opens up M-Pesa to rivals.
Safricom may be the industry leader but “does not possess significant market power,” Wang’ombe Kariuki, director general of Kenya’s Competition Authority, told lawmakers Tuesday in the capital, Nairobi. The gap between the company’s market share and that of closest rival Bharti Airtel Ltd. is narrowing, showing that competitors have the scope to grow their businesses, he said.
In a submission to parliament Monday, Safaricom dismissed the report’s recommendations and said the Communications Authority should scrutinise smaller operators to ensure they are making appropriate investments.
“If you invest you are likely to get the customers you’re crying that you don’t have today,” Stephen Chege, Safaricom’s director of corporate affairs, told the lawmakers.
The shares were little changed at KES 28 by the market close on Tuesday, valuing the company at KES 1.1 trillion ($11 billion). Kenya’s second-largest listed company is worth KES 188 billion, according to data compiled by Bloomberg.
Vodacom, itself a unit of Vodafone Group Plc, holds a 35 per cent stake in Safaricom, which on Monday welcomed back Chief Executive Officer Bob Collymore after nine months of medical leave. The CEO was paid KES 196.5 million in the year through March, compared with KES 168.5 million the previous year.
The antitrust agency recommended that the government speeds up the process of integrating mobile-money transfer platforms to compete with M-Pesa. It also said licenses should be pegged to a minimum infrastructure investment and that failure to spend the cash within a set time-line should result in repossession, Kariuki said.