The Communications Authority of Kenya headquarters in Nairobi/ Courtesy.
NAIROBI, Kenya Feb 3- The Communications and Multimedia Appeals Tribunal is set to start hearing a petition by Safaricom against the Communications Authority of Kenya.
The giant telco has petitioned the Communications and Multimedia Appeals Tribunal to block the decision by CA to drop Mobile Termination Rates (MTR) to Sh0.12 per minute from the current Sh0.99 per minute.
Mobile Termination Rates are charges levied by a mobile service provider on other telecommunications service providers for terminating calls in its network.
In December 2021, the communications regulator reviewed mobile terminations rates (MTRs) and fixed termination rates (FTRs), capping them at Sh0.12 per minute.
In a statement, CA Director-General Ezra Chiloba said the cut will have a positive impact on both consumers and operators, adding the review will reduce the need for consumers to own multiple SIM cards as charges across networks come down.
“As the ICT industry regulator, the Authority is charged with the responsibility of ensuring consumers have access to affordable communications services,” he said.
Safaricom is however appealing the decision, arguing that the move to cut these rates will negatively impact its revenues and profitability and occasion its financial loss.
Safaricom, Kenya’s largest telco with over 30 million subscriptions earns Sh6.5 billion annually from MTR while paying out Sh2.6 billion to rivals.
Following Safaricom’s application, the tribunal chaired by Rosemary Kuria suspended CA’s decision on the cuts until the case is heard and determined. The cuts were to be implemented from the beginning of 2022.
In its response to Safaricom’s petition, the sector regulator says that it plans to conduct a more detailed network cost study of mobile termination rates that could further review the charges.
Data by CA shows that the rate has been falling gradually from a high of Sh4.42 in 2011 to Sh0.99, which has been in place since 2015.
The CA says the recent cut in mobile termination rates will give smaller telcos in the country a fighting chance at competing with market leader Safaricom.
Tough Odds
Airtel and Telkom which are Kenya’s second and third-largest telcos respectively have backed the regulator’s decision, saying it will ensure a level-playing field for all, while protecting the commercial interests of smaller operators.
The two telcos had earlier criticised Safaricom for seeking to scuttle the recently announced reduction in MTR, accusing Safaricom of only being interested in protecting its revenues from rivals.
The Consumers Federation of Kenya, Airtel Kenya, and Telkom Kenya have joined the legal fight throwing their weight behind CA.
Airtel, the second-largest telco says it pays Safaricom interconnection charges at an average of Sh300 million per month- equivalent to Sh3.6 billion annually.
“The ideal situation (as per the International Telecommunication Union -ITU) is that a network operator ought not to make a profit from an interconnection. Such charges should only go towards the cost of infrastructural maintenance,” Airtel’s Head of Legal Lilian Mugo said.
She termed Safaricom’s petition as a move to continue enjoying “unfair competition practices.”
Airtel said that by applying the interconnection charges, Safaricom receives more than 60 percent of the MTR pay-outs. Smaller players like Airtel, on the other hand, remain net payers of interconnect charges.
“In some of segmented tariff offers that we give to our customers, where 82 percent of the traffic is off-net, for every Sh20 received from the Airtel’s customer, Safaricom receives Sh16.24 as termination cost,” Mugo said.
The case will be mentioned on February 16, 2022, for the tribunal to confirm whether Safaricom has filed its response and for further directions concerning the hearing of the appeal.
The Consumers Federation of Kenya has also joined the legal fight throwing its weight behind the regulator.
