The World Bank has singled out Kenya’s telecommunications industry as one of the country’s fastest-expanding sectors, while warning that its regulatory framework is badly out of step with the market’s size, complexity and economic clout.
In its latest review, the Bank highlights deep policy gaps in infrastructure sharing, spectrum management and digital-market oversight which, it says, increasingly advantage dominant operators such as Safaricom and Airtel. These weaknesses are driving up costs for smaller firms and consumers, while dampening fresh investment that could widen coverage and lift service quality.
A central concern is Kenya’s infrastructure-sharing regime, which has remained largely unchanged since 2010. Although operators are technically allowed to share towers, ducts and fibre, the system relies heavily on informal negotiations with minimal regulatory pressure. According to the World Bank, large network owners can quietly delay or deny access, pushing smaller rivals to erect duplicate towers instead of using existing infrastructure. The result is wasted capital on redundant steel rather than cheaper, broader network expansion.
The report also faults Kenya’s approach to spectrum distribution. Despite surging demand for high-speed mobile broadband, frequencies are still allocated on a first-come, first-served basis. The World Bank notes that this hands incumbents a built-in edge and leaves new entrants in the dark over how decisions are reached. With no active secondary market, spectrum often remains with original holders even when better uses emerge, creating inefficiencies and uneven access across the industry.
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By contrast, the Bank argues that shifting to competitive auctions when demand exceeds supply would ensure frequencies go to operators best placed to deploy them productively.
The review points to Nigeria, Colombia and Myanmar as examples of successful reforms where operator-owned towers were sold off to independent infrastructure firms. That transition lowered costs and improved service quality by making infrastructure openly shareable. Kenya, however, still has most of its telco towers under the control of dominant operators, limiting the competitive gains seen elsewhere.
Mobile termination rates were also flagged as a persistent distortion. Kenya is yet to implement cost-reflective charges that promote competition. These fees, paid when a call crosses from one network to another, weigh more heavily on smaller operators, while larger networks benefit from what the Bank describes as a “club effect”. Bigger firms receive more termination fees than they pay, reinforcing their market dominance.
Although regulators have capped the rate at Sh0.41 per minute, the World Bank says this remains well above cost and higher than levels in countries such as Tanzania and Ghana. The burden falls hardest on low-income users. About half of Kenya’s bottom 40 percent still rely on basic phones, and for this group, voice calls are used more than four times as often as mobile internet.
To address the imbalances, the World Bank is calling for tougher infrastructure-sharing rules with clearer pricing, guaranteed access and faster dispute resolution. It also recommends overhauling the spectrum framework to introduce transparent auctions where demand outstrips supply.
These reforms, the Bank adds, should be guided by regular market studies to identify firms with significant market power and apply targeted remedies, including fairer mobile termination rates, with particular protection for low-income users.
