Kenya's competition watchdog says no need for action on Safaricom

By Duncan Miriri

NAIROBI (Reuters) - Kenya's competition watchdog expressed concern on Tuesday about the wider economic impact of lawmakers and the country's telecoms regulator taking a tough line on dominant operator Safaricom, saying no action was needed.

"Any regulation focusing on the sector should have a multi-agency approach because its effects would cut across all the drivers of the economy," Wang'ombe Kariuki, the director general of the Competition Authority told the Kenyan parliament's communication and information committee.

Kariuki said the Competition Authority had not found any evidence of Safaricom, which has a 67 percent market share, abusing its dominance in any of its business sectors, meaning there was no need for action by regulators.

"Any regulatory intervention should be aimed at supporting and increasing consumer welfare and at no time should regulatory intervention have an object of deepening private shareholders' gains," he added.

Safaricom has in the past been found guilty of entering restrictive agreements with its mobile (M-Pesa) money agents which prohibited the selling or promotion of services by its rivals, Kariuki said.

The company was ordered to delete all the restrictive clauses in the agreements, allowing the agents to offer mobile money services and products from other operators, he added, revealing the regulatory action for the first time.

A draft report of a study commissioned by Kenya's telecoms regulator recommended that Safaricom should offer rivals access to its transmission sites and its vast network of mobile money outlets to increase competition in the sector.

It also says the Communications Authority should curb Safaricom's ability to offer promotional tariffs to its 30 million customers that its rivals cannot match.

Safaricom's chief executive Bob Collymore told the committee on Monday that his company does not hinder competition.

Collymore said he was confident authorities would not seek to punish the success of Safaricom, which is 35 percent-owned by South African group Vodacom with the Kenyan government and Britain's Vodafone also holding stakes.

The other big players in the market are Bharti Airtel's Kenyan unit, which has a 19.7 percent market share, and Telkom Kenya, controlled by London-based Helios Investment, with 8.6 percent of the market.

Airtel Kenya and Telkom have called for the urgent implementation of the report on boosting competition.

(Reporting by Duncan Miriri; Editing by Alexander Smith)