Notorious Telco Safaricom to be probed

Safaricom #ticker:SCOM is facing a regulatory probe after an outage knocked out services for more than 12 hours starting Saturday evening.

The voice and data outage left majority of its 31.8 million subscribers with difficulties making calls or SMS.

The Communications Authority (CA) is investigating the glitch and Safaricom is likely to be fined should the outage be deemed to be the product of omissions by the firm.

“The authority will certainly investigate and seek to know the cause of the downtime,” said a source at CA.

The firm did not specify the exact cause of the outage in a day when its subscribers expressed their displeasure via social media.

Service outages are increasingly putting telcos at the risk of penalties from the regulator, which is permitted by law to sanction any telecommunications company that inconveniences customers through service interruptions as a result of omission on their part.

The law provides that an operator in breach be fined up to 0.2 percent of the firm’s revenues, which could run into hundreds of millions.

In 2017, Airtel was fined Sh26.6 million by CA for failing to meet the set standards on call quality in a period that saw rival Safaricom slapped with a hefty penalty of Sh270 million. Telkom Kenya paid Sh14.9 million for quality breaches during the same period.

Last month, Airtel Kenya restored its services after 27 hours of downtime, which affected its data, calling and texting services.

Last year, Safaricom’s mobile money platform M-Pesa was hit with a downtime, inconveniencing customers.

The outage saw Information, Communications and Technology Secretary Joe Mucheru direct the CA to carry out an investigation and issue a report.

The platform handled a total of 649.3 million transactions valued at Sh1.7 trillion in three months to June 2019, showing its growing significance to the economy.

Telecommunications service outages have also been viewed as a threat to the economy, especially for critical services such as money transfers.

A 2016 National Treasury report warned that a collapse of the M-Pesa service could for instance cause widespread disruption in the economy.

Safaricom has recently ceded market share to Airtel, which is the second biggest operator in the country and has recently sustained an aggressive hunt for subscribers.

Airtel Kenya’s market share based on voice traffic jumped to 34.8 percent at the year to June, from 25 percent in a similar period a year ago, according to CA.

In contrast, Safaricom share dipped from 70 percent to 60.6 percent in the period under review.

But the shift in market shares has failed to end Airtel’s loss making streak.

Investors have also shrugged off the developments with Safaricom’s shares at the Nairobi Securities Exchange rising 19.5 percent over the past year to trade at Sh28.45 on the back of record profits.