Market Structure

The Communications Authority of Kenya (CA) has recently updated its regulatory framework for market structure, culminating in the Revised Telecommunications Market Structure for 2026. This significant policy development, rooted in the Kenya Information and Communications Act, 1998, aims to foster competition, encourage investment, and adapt to the evolving digital landscape. Key changes include the formal recognition and integration of data centres into the licensing regime, revised Network Facilities Provider (NFP) licence categories with expanded scopes and longer terms, and a streamlined approach to communications equipment licensing. The revisions underscore the CA's commitment to enabling regulation and addressing market barriers, while also navigating complex jurisdictional considerations with the Competition Authority of Kenya regarding market dominance and anti-competitive practices.

Kenya's vibrant and rapidly evolving information and communications technology (ICT) sector is underpinned by a dynamic regulatory environment, primarily shaped by the Communications Authority of Kenya (CA). The CA's approach to market structure is a critical determinant of competition, innovation, and consumer welfare within the telecommunications, broadcasting, and postal services sectors. As the digital economy expands, the need for a robust yet adaptable regulatory framework becomes paramount to ensure fair play, attract investment, and facilitate universal access to communication services.

In a significant development, the CA has recently unveiled its Revised Telecommunications Market Structure for 2026, marking a pivotal moment in the ongoing evolution of Kenya's ICT regulatory landscape. This comprehensive review seeks to address emerging market realities, remove identified barriers, and align the regulatory regime with contemporary ICT policy guidelines. For legal practitioners and industry stakeholders, understanding these revisions is essential for navigating licensing requirements, ensuring compliance, and advising on strategic investments in Kenya's burgeoning digital infrastructure. This article delves into the intricacies of the CA's market structure policies, highlighting the key changes introduced by the 2026 revisions and their implications for the sector.

The regulatory foundation for Kenya's communications sector is primarily established by the Kenya Information and Communications Act, 1998 (KICA), which mandates the Communications Authority of Kenya (CA) to license all communication systems and services in the country. Under KICA, the CA is tasked with preparing market structures, overseeing licensing procedures, granting licences to various operators and service providers, and enforcing licence conditions and regulations. A cornerstone of this framework is the Unified Licensing Framework (ULF), a technology and service-neutral system that has been in place since 2008 and was last amended in 2014.

The ULF categorises licences into broad market segments, including Network Facilities Providers (NFP), Application Service Providers (ASP), and Content Service Providers (CSP). NFPs are responsible for deploying communication infrastructure, with different tiers (NFP-Tier 1, 2, and 3) dictating the scope of coverage from national to specific geographic areas. ASPs provide services to end-users utilizing leased infrastructure, while CSPs offer content-related services. The CA's mandate extends beyond licensing to actively maintaining and promoting effective competition among commercial entities, guarding against anti-competitive behaviour, and protecting consumer interests regarding pricing, quality, and variety of services. This regulatory oversight is crucial in a market dominated by a few key players, such as Safaricom, which holds a significant market share, particularly due to its mobile money service, M-Pesa.

The Communications Authority's Revised Telecommunications Market Structure for 2026 represents a significant overhaul designed to enhance market efficiency and accommodate technological advancements. A notable change is the formal recognition and integration of commercial data centres within the telecommunications licensing ecosystem, providing much-needed regulatory clarity for cloud service providers and digital infrastructure investors. This move embeds data centres within the existing infrastructure framework, aligning them with network-oriented activities and differentiating between large-scale and community-level facilities.

Further refinements have been made to the Network Facilities Provider (NFP) licences. The scope of the NFP-Tier 3 Licence has been expanded from single-county coverage to three counties, aiming to make it more commercially viable. The NFP-Tier 2 Licence now explicitly includes data centre licensing, allowing existing holders to establish commercial data centres without requiring a separate licence. For national operators, the NFP-Tier 1 Licence now offers an optional 25-year term, in addition to the standard 15-year term, providing greater investment certainty for long-term infrastructure deployment. Equipment-related licensing has also been restructured into distinct categories: Communications Equipment Distributor (CED), Communications Equipment Contractor (CEC), and Communications Equipment Vendor (CEV), streamlining the process for importation, contracting, and vending.

While the CA is mandated to promote competition, its role sometimes intersects with that of the Competition Authority of Kenya (CAK), established under the Competition Act, 2010. There has been a long-standing debate regarding the proper regulator for competition matters in the ICT industry. For instance, proposed Fair Competition and Equal Treatment Regulations, 2025, under KICA, aim to promote fair competition and protect against abuse of market power. However, these regulations grant the CA discretion, rather than an obligation, to consult with the Competition Authority of Kenya when determining market dominance. This discretionary approach has been criticised for potentially undermining inter-agency cooperation and adopting a narrow view of competition regulation. The Competition Authority of Kenya (CAK) has previously emphasized that dominance itself is not illegal, but rather the abuse of a dominant position, advocating for measures like infrastructure sharing to ease market entry barriers instead of price caps. This highlights a nuanced regulatory landscape where both authorities play crucial, albeit sometimes overlapping, roles in shaping market structure and competition.

The CA regularly undertakes market reviews and public consultations to ensure its framework remains responsive to sector needs. For example, a public review of the ULF was launched in December 2024 to assess its evolution in line with current sector requirements, inviting stakeholder submissions. This iterative approach to regulation, while fostering adaptability, also necessitates continuous engagement from legal professionals to keep abreast of proposed changes and their potential impact.

The Communications Authority of Kenya's proactive stance in revising its market structure, particularly through the 2026 updates, signals a clear intent to foster a competitive, innovative, and digitally inclusive communications sector. For practising attorneys, these changes necessitate a thorough understanding of the updated licensing categories, particularly for Network Facilities Providers and the newly formalized data centre operations. Compliance with the new equipment licensing framework and an appreciation of the nuanced interplay between the Communications Authority and the Competition Authority of Kenya on matters of market dominance and anti-competitive practices are now more critical than ever.

Practitioners should closely monitor the implementation of the Revised Telecommunications Market Structure 2026 and any further subsidiary regulations, such as the proposed Fair Competition and Equal Treatment Regulations, 2025. The ongoing dialogue between regulatory bodies and the industry underscores the dynamic nature of this field. Advising clients on market entry, expansion strategies, merger control, and compliance requires a deep dive into these evolving policies to ensure legal soundness and strategic foresight in Kenya's rapidly transforming digital economy.