Does Kenya Have A Safaricom Problem?

Does Kenya Have A Safaricom Problem?

Kenya’s Safaricom is exceedingly dominant.  It holds at least 60% of the voice & messaging market. It also rules the data market with at least 60% of the market share. It’s one oasis, mobile money product, MPESA, controls 99% of the local money market. My questions are these: does Kenya have a problem in Safaricom? And should this company be broken into two, as the Kenyan Senate is pushing for?

Kenya is simply a Safaricom nation.

Some years ago, the CA sought the services of Analysys Mason to determine if the carrier business needed some form of adjustments to level the playing field for everybody. The British consultancy firm revealed its findings and recommendations, such as the separation of M-PESA from Safaricom.

‘The two businesses would be required to operate in separate offices, with separate staff below board level, separate branding, separate accounting and separate business operations and support system, customer support systems and management information systems,’ read a report from the firm.

While the recommendations were never really implemented, the discussion appears to have come up again following a Senators meet that maintains Safaricom is a dominant player.

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Comment #1: Is the company experiencing governance issues as presently constituted? What kind of splitting, down the middle, or creating another entity and migrating assets? Or they just want to break the monopoly of Safaricom? A lot of things you have to share with us, prof.

My Response: I think it is the monopoly at play here. 99% is absolute market dominance!

Comment #2: This is an interesting topic here in Kenya, and many feel with its dominance, it needs to be split and let MPesa scale out and expand beyond Kenya.

My Response: I agree also. MPESA alone would be a fintech. Today, MPESA is mobile money which is not a phrase many care about in the Western World. Breaking MPESA from Safaricom will make Safaricom suffer locally but it would open MPESA to an unbounded global future.

Comment #3: Safaricom doesnt need to be split. It would be a blow to innovation ingenuity hardwork and business savvy. Safaricom started of as a minion but has grown its way up.

The market cap of Safaricom is so low that if MPESA is a separate company, it would be worth all of the current number. While Senate of Kenya is concerned on monopoly, I think a separate MPESA would serve Kenya and Africa better. Think of PayPal under ebay and the new separate PayPal. The current one has outperformed and eclipsed the total worth of old eBay before the split.

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