Telecommunications firm Safaricom has opposed the lowering of interconnection rates by the Communications Authority of Kenya. Safaricom has announced that it will appeal the decision that saw CA cut the mobile termination rate by 88 per cent. It has termed the move by CA as unprocedural.
Safaricom has also filed its case before the Communications and Multimedia Appeals Tribunal. it has pleaded for the matter to be certified as urgent, with the new CA rates set to come into effect on January 1, 2022.
Safaricom argues that CA refused to follow its own procedures and therefore erred by using bench marking methodology rather than the long-run incremental costing (LRIC) that has been used in previous rate reviews.
“The respondent (CA) adopted a procedure that was unreasonable and procedurally unfair in arriving at the impugned decision contrary to Article 47 of the Constitution as well as section 4 of the Fair Administrative Action Act, 2015,” says Safaricom in its appeal filings.
CA cut the rate mobile phone operators charge each other for interconnecting customers by Sh. 0.87 or 87.7 percent, signalling lower call tariffs. The regulator cut the charges commonly referred to as mobile termination rate (MTR) from Sh. 0.99 to Sh. 0.12 to match shifts in technology that have made mobile telephony more efficient.
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Under the new rates, it has been expected that the lower mobile termination rate will translate into reduced calling rates for Kenyans. However, Safaricom has argued that if the new rates are implemented, it will suffer irreparable loss. “The applicant stands to suffer substantial and irreparable loss unless this application is heard, and a stay of the decision is granted as a matter of urgency,” says Safaricom in its suit. It is currently estimated that Airtel has been paying Safaricom up to Sh. 300 million under the existing rates.
Safaricom adds that CA did not furnish it with the information, materials, and evidence it relied on in making the decision to reduce the MTR and fixed termination rates (FTRs). The firm has also argued that that MTR and FTR reviews are typically undertaken when markets are deemed to be efficient, where all players have equally invested in infrastructure that allows them to recover their costs in a similar manner.