Airtel and Telkom have scored big after the government initiated new regulations that will see it control Safaricom call charges.
This will be done by controlling how Safaricom charges competitors for terminating calls on its network.
The new regulations will now require Safaricom to only charge fees to cover the costs of interconnecting calls from its rivals. This means that Safaricom will not be making profit from mobile termination rates (MTRs).
These new regulations are contained in the draft Kenya Information and Communication (Interconnection) Regulations 2022.
In December 2021, the Communications Authority cut the rate mobile phone operators charge each other for interconnecting customers by Sh. 0.87 which was equivalent to 87.7 per cent.
This saw the MTR charges fall from Sh. 0.99 to Sh. 0.12 to match shifts in technology that have made mobile telephony more efficient.
At the time, Airtel was charging Sh. 2.78 to make calls to other networks per minute while Safaricom and Telkom charged Sh. 4.87 per minute and Sh. 4.30 to call rival networks respectively.
Airtel also disclosed that it pays Safaricom Sh. 300 million per month or Sh. 3.6 billion per annum in MTRs.
The mobile termination rate was in 2012 cut to Sh. 1.44 per minute from Sh. 2.21. It was then slashed to Sh. 0.99 in 2015. In 2011, the government stopped further cuts after operators complained that their business was under threat from sliding revenues.
Safaricom however opposed these cuts and filed for a case before the Communications and Multimedia Appeals Tribunal. Safaricom argued 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.
Under the new regulations now, telcos will be allowed to freely negotiate the MTR charges. However, the CA will set lower rates if Safaricom fails to strike a deal with the smaller rivals.
How Purity Wangechi was murdered after discovering lover was a thug
Safaricom will also be compelled to show proof that its MTRs are based on actual costs.
