SAFARICOM'S STATEMENT ON PROPOSED COMPETITION GUIDELINES AND CONSULTATION PAPER ON REGULATED SERVICES-ISSUED ON AUGUST 18, 2011

Safaricom has noted the Consultation Paper on "Regulated Services in Specific/Relevant Markets in the Telecommunications Market in Kenya" and the proposed Competition Guidelines announced by the Communications Commission of Kenya ("CCK") in a newspaper advertisement dated 9th August 2011 as well as on its website. We wish to clarify that at this time Safaricom Limited has not been declared dominant and no regulatory interventions have been pronounced against us.

Generally, under the Kenya Information and Communications Act and the Regulations made thereunder, the CCK has powers to manage certain aspects of competition in the telecommunications industry. It is able to identify different market segments (typically based on products and services), examine the levels of competition in those market segments, make declarations of dominance, carry out tests to determine whether there has been abuse of dominance and in such cases implement proportionate and appropriate remedies.

In doing this, the CCK must follow the provisions of the Act and the Regulations. It is in this regard that Safaricom and all other operators have been given up to the 26th August 2011 to give submissions to this consultation.  We expect that CCK will carry out further consultations before any pronouncements are made. It is our view that the recently enacted Competition Act and the newly created Competition Authority, which is the ultimate authority on competition issues in Kenya market, should be engaged in this process.

The indication in the Consultation Paper that the CCK may regulate Safaricom's retail mobile voice and SMS services is not an eventuality we believe will be implemented at the conclusion of this consultation process. Even if CCK makes a finding of dominance against Safaricom it must demonstrate that Safaricom has abused such dominance before it can make any remedial interventions.

We believe Safaricom has attained its current market share based on fair competition on the back of innovation, investment in our brand and providing relevant services to our customers. In any event, retail price controls is considered a drastic measure of last resort and the Kenya Government has been clear that it will avoid retail price controls in competitive markets.

With regard to prohibition of cross–subsidization, these are obligations that are already embedded in Safaricom's operating licenses and with which we are already complying.

We again wish to clarify to our customers, investors and the general public that Safaricom has not been declared dominant, has not engaged in any activities that may be deemed to be anti-competitive and we do not believe that Safaricom's retail prices will be regulated.

Safaricom looks forward to fully participating in this consultation process and shall provide all the information that may be required to reach a fair and objective outcome.

Bob Collymore

CEO, Safaricom Limited

Safaricom has noted the Consultation Paper on "Regulated Services in Specific/Relevant Markets in the Telecommunications Market in Kenya" and the proposed Competition Guidelines announced by the Communications Commission of Kenya ("CCK") in a newspaper advertisement dated 9th August 2011 as well as on its website. We wish to clarify that at this time Safaricom Limited has not been declared dominant and no regulatory interventions have been pronounced against us.

Generally, under the Kenya Information and Communications Act and the Regulations made thereunder, the CCK has powers to manage certain aspects of competition in the telecommunications industry. It is able to identify different market segments (typically based on products and services), examine the levels of competition in those market segments, make declarations of dominance, carry out tests to determine whether there has been abuse of dominance and in such cases implement proportionate and appropriate remedies.

In doing this, the CCK must follow the provisions of the Act and the Regulations. It is in this regard that Safaricom and all other operators have been given up to the 26th August 2011 to give submissions to this consultation.  We expect that CCK will carry out further consultations before any pronouncements are made. It is our view that the recently enacted Competition Act and the newly created Competition Authority, which is the ultimate authority on competition issues in Kenya market, should be engaged in this process.

The indication in the Consultation Paper that the CCK may regulate Safaricom's retail mobile voice and SMS services is not an eventuality we believe will be implemented at the conclusion of this consultation process. Even if CCK makes a finding of dominance against Safaricom it must demonstrate that Safaricom has abused such dominance before it can make any remedial interventions.

We believe Safaricom has attained its current market share based on fair competition on the back of innovation, investment in our brand and providing relevant services to our customers. In any event, retail price controls is considered a drastic measure of last resort and the Kenya Government has been clear that it will avoid retail price controls in competitive markets.

With regard to prohibition of cross–subsidization, these are obligations that are already embedded in Safaricom's operating licenses and with which we are already complying.

We again wish to clarify to our customers, investors and the general public that Safaricom has not been declared dominant, has not engaged in any activities that may be deemed to be anti-competitive and we do not believe that Safaricom's retail prices will be regulated.

Safaricom looks forward to fully participating in this consultation process and shall provide all the information that may be required to reach a fair and objective outcome.

Bob Collymore

CEO, Safaricom Limited

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