M-Pesa, Airtel Money set for split in new Bill

Safaricom #ticker:SCOM , Airtel and Telkom Kenya will be required to split their telecommunications business from their mobile money transfer and lending units if a Bill set to be presented for debate in Parliament is passed into law.

The Kenya Information and Communications (Amendment) Bill 2019, which is sponsored by Gem MP Elisha Odhiambo, is seeking to compel mobile phone companies to form separate arms to manage any other business they engage in outside telecommunications services.

In a move that could complicate the business environment for the telcos, the Bill says they will have to apply for licences “from the respective regulators of any industry or sector ventured into”.

They will also be required to “legally split or separate the telecommunciations business from such other business.

Parliamentarians have in the past unsuccessfully pushed for Safaricom to split its telecommunications service business from its mobile money transfer platform, M-Pesa.

The mobile phone giant earlier this year unveiled yet another service for overnight lending, known as Fuliza, which moved in excess of Sh6 billion in the first few weeks of launch. Safaricom offers this service in addition to the 30-day lending service, M-Shwari.

Should MPs pass the Bill proposed by Mr Odhiambo, Safaricom will have to keep separate financial statements for the mobile money transfer and lending units and any other businesses it ventures into besides facilitating phone calls, short message services and data.

Similarly, Telkom Kenya and Airtel, which are set to merge, will be required to hive off any other businesses they engage in outside the core telephony services.

Companies with existing businesses will be given six months to comply if the Bill is passed into law and assented to by the President.

The Bill warns that anyone who flouts the proposed regulations and fails to obtain the relevant licences for their respective businesses will be liable to a fine “not exceeding ten million shillings or to imprisonment for a term not exceeding two years or both”.

If passed as is, the Communications Commission of Kenya (CA) will be required to inform Parliament about the compliance levels by the telcos, first within six months after the Bill becomes law and once a year thereafter.

“The amendment will further aid in control of anti-competitive practices by the large industries in the sector,” says the MP in the memorandum of objects and reasons for the Bill.

This clause appears targeted at Safaricom, which controls over 70 percent of the mobile phone services market largely on the strength of its money transfer and lending services. Multiple attempts to declare Safaricom a dominant player have failed in the past.

Besides separating the revenue streams, telcos will also be required to compensate consumers for dropped calls at the rate of Sh10 for every call dropped for up to three dropped calls a day. The telcos will, however, be exempted from compensating consumers where a call is interrupted by a third party.The Bill says this measure is meant to guarantee quality services “at just, reasonable and affordable rates for all consumers”.

Mr Odhiambo says the amendment is aimed at compelling telcos to invest in infrastructure that will guarantee quality of service to consumers.

He also proposes the creation of a “Universal Service Fund” to be managed by the CA and whose purpose will be to increase access to mobile telephone services countrywide “and promote innovation in information and communications technology services.’’