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Airtel accuses Safaricom of coercing mobile money agents in Kenya

Kenya , 04 Dec 2015

Airtel accuses Safaricom of coercing mobile money agents in Kenya

Airtel Kenya has renewed its battle with Safaricom after accusing the country's leading operator of coercing mobile money agents to remove Airtel branding from their shops and stop offering Airtel Money services.

Six months after the Competition Authority of Kenya (CAK) helped the rival firms reach a negotiated settlement on similar claims, the firms are back at loggerheads.

Airtel, through its lawyers Mukite Musangi Advocates, has written to Safaricom accusing it of coercing its mobile money transfer agents to remove Airtel branding from their shops and stop offering Airtel Money services, with the leading operator allegedly saying agents would have their M-Pesa tills disconnected should they fail to do so.

This, Airtel argues, is against the settlement the two firms had with the CAK, which removed exclusivity of M-Pesa agents and allowed them to offer rival services. The company says despite several assurances from Safaricom that it was investigating the matter, the "defacing" of Airtel's branding has "continued unabated" and restrictions remain on agents.

Safaricom has denied the allegation, and insists it has not instructed any agent to deface or remove Airtel's logo from any premises.

Airtel said that Safaricom's "conduct would only serve to aggravate an existing dispute in court and could in fact very well lead to the emergence of additional litigation".

The opening up of M-Pesa outlets to rival mobile money products was seen as a big win for Airtel, which has in the past pushed for integration of mobile money services, while the company also said ending the restrictions allowed agents to earn more in commissions.

The Communications Authority of Kenya (CA) is preparing to hire an international firm to examine Kenya's telecommunication and broadcasting sectors for market dominance and anti-competitive behaviour, with the brief also including a review of existing policy and frameworks on competition.

The report is expected to offer insights into the market status and facilitate decision-making in prescribing proportionate and appropriate regulatory actions.

It is the second time in a matter of weeks that Safaricom has been accused of coercion, after Kenyan bitcoin remittance startup BitPesa and automated mobile payments company Lipisha took the company to court over allegations it intimidated Lipisha and forced it to suspend BitPesa services without notice.

The two companies allege Safaricom terminated BitPesa services without notice, notifying Lipisha via SMS after it had occurred, and that Safaricom previously "intimidated" Lipisha in order to stop it from offering services to BitPesa. The case is still before the courts.

However, in some positive news for the leading operator, consultancy firm KPMG has released its first True Value report in Africa, which quantifies the value the company has delivered to the Kenyan economy.

KPMG's report finds Safaricom generated a total of KES315 billion in revenues to Kenya's GDP during the 2014/15 financial year, accounting for around six per cent of total GDP.

"The True Value report aims to discover an organisation's value to both the economy and society beyond traditional financial reporting. It allows companies to identify how business leaders can better understand the impact their organisations have on an economy," said Neil Morris, director at KPMG.

The report also said Safaricom generated societal value for Kenya at least nine times greater than their financial profit in the year in question, with Safaricom's operations sustaining around 682,000 jobs in Kenya, around four per cent of the total economically active labour force in Kenya.

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