Opinion and Analysis
A Safaricom customer care centre in Nairobi. CAK claims Safaricom failed
to meet quality of service targets set by the regulator in the
financial year 2012/2013. Photo/FILE
By George Bodo
In Summary
- CAK said Safaricom failed to meet quality of service (QoS) targets set by the regulator in the financial year 2012/2013.
- The firm seems to have lost the cordial relations with government that it previously enjoyed, especially after the Westgate terrorist attack in September 2013.
In the first week of March, Safaricom
disclosed that it had entered into discussions to buy some of the
assets of Essar Telecommunications (which has been trading as yuMobile).
In the proposed transaction, Safaricom was
expected to go for no less than yuMobile’s current network
infrastructure that includes base stations; and which could, among other
things, help it with such key areas as improving voice quality.
However, they were not the only party in the
transaction since Airtel was to acquire more than three million
subscribers on yuMobile who would enjoy free mobile number portability,
meaning they would not change their lines.
It has now emerged that Safaricom has ran into strong regulatory headwinds to the extent that it is considering withdrawing its offer.
The regulator— the Communication Authority of
Kenya (CAK) — has suggested that granting of no-objections for
Safaricom’s application will not be automatic. But this is not a
surprise.
According to CAK, Safaricom, as a market leader in
the mobile telephony business, failed to meet quality of service (QoS)
targets set by the regulator in the financial year 2012/2013.
According to CAK, Safaricom was the only operator
that did not meet the set targets and scored worst ratings in Eastern,
North Rift and North Eastern regions. Compliance was tested on several
paremeters. So there has been a constant back-and-forth between the two
entities regarding quality of service.
And still staying with the regulator, Safaricom is
highly regarded as being a dominant player. For the first quarter
period ended September 2013 (of the current 2013/2014 financial year),
it controlled 79.1 per cent of total voice traffic.
Additionally, 95 per cent of its voice traffic
were on-net, which means Safaricom subscribers called each other the
most (a phenomenon referred to as the club effect); its closest rival
Airtel, registered only 45 per cent.
The regulator generally does not seem to be happy
with this “club effect” and regards Safaricom as making it harder for
other operators to access its subscribers.
Secondly, Safaricom seems to have lost the cordial
relations with government that it previously enjoyed, especially after
the Westgate terrorist attack in September 2013. This stemmed from CAK’s
claims that the terrorists used unregistered sim cards to plan and
carry out the attack.
This became a public relations nightmare
especially for both Safaricom and Airtel (and senior operatives in the
Government may not have been specifically happy with Safaricom’s
handling of the situation).
This high-level relationship remains a key element
of doing business. But most importantly, the regulator does not seem to
be happy with certain elements of the industry, which it directly
attributes to Safaricom’s dominance.
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