2019 Sustainable Business Report

SAFARICOM SUSTAINABLE BUSINESS REPORT 2019 INTRODUCTION OUR BUSINESS OUR MATERIAL TOPICS STAKEHOLDER ENGAGEMENT CONCLUDING REMARKS 33 NAVIGATING THE REGULATORY UNIVERSE A sound regulatory system is crucial for supporting the growth of our industry. It provides an enabling environment for competition between businesses and enforces fair practices, driving equal opportunity and the inclusive participation of all segments of society in the economic and social spheres. We ensure that we remain compliant with regulatory requirements by assessing our processes against all applicable laws and regulations. In the year under review, we successfully completed the automation of our compliance returns process. We also have updated our comprehensive archive of the laws and regulations that impact Safaricom. THE DATA PROTECTION BILL AND POLICY Data protection is an important topic the world over, and two Data Protection bills are currently under consideration in Kenya which, if enacted, will guarantee the protection of customers’ privacy. We participated in stakeholder engagements to discuss both and provided input into their development. We have reviewed and developed our data security and protection policy in line with the European Union (EU) General Data Protection Regulations (GDPR), as well as the proposed Kenyan legislation, which governs the management of data going forward. THE FINANCE ACT The Finance Act 2018 was gazetted on 21 September 2018. Sections of this legislation that affect our business include: • A telephone and internet data services excise duty increase from ten per cent to 15 per cent, impacting the cost of our voice, SMS and data services. • Excise duty on M-PESA transaction charges maintained at 12 per cent, following an increase from ten per cent in the initial Finance Bill proposal of June 2018. MEETING THE REQUIREMENTS SET BY NETWORK REGULATORS Our regulatory team supports the network by assisting in the management of key performance indicators (KPIs) related to our network license conditions including spectrum, number of resources and quality of service. Like all mobile network operators (MNOs), compliance with our network license obligations is assessed from the perspective of quality of service (QoS), measured by the Communications Authority. In the past we have been penalised for our quality of services as assessed by the CA’s QoS methodologies. A NEW QUALITY OF SERVICE FRAMEWORK The new framework for measuring Quality of Service (QoS), introduced by the Communications Authority, was operationalised on 1 July 2018 and is expected to be fully adopted over three years. In FY19, the authority launched new monitoring equipment for more accurate measuring of end-to-end performance, as well as a supplementary questionnaire. The new QoS framework, which has not yet taken effect, will increase the scope of parameters to be measured, as well as scrutiny of our call quality and customer satisfaction levels. The new framework has three key focus areas: network performance (measuring stability and availability using data automatically submitted from operator systems); end-to-end quality of service (measured through drive tests and walk tests, where the threshold is 80%), and Quality of Experience (QoE) (using surveys to establish customer satisfaction with the performance of the network). Non-compliance register FY19 FY18 FY17 FY16 Number of fines for non- compliance 0 0 1 1 Cost of fines for non- compliance (KSh million) 0 0 294 157 Non-monetary sanctions for non-compliance 0 0 0 0 Legal actions lodged for anti-competitive behaviour 0 0 0 2 REGULATORY ENVIRONMENT