Kenyan regulator plans further cuts to Safaricom’s termination charges

Kenyan regulator plans further cuts to Safaricom’s termination charges

More controversy seems imminent in the row about Safaricom’s alleged dominance of the Kenyan market. African press reports now suggest that the operator’s mobile termination rates (MTRs) are soon going to be controlled by the government in a bid to protect Safaricom’s smaller rivals.

The Kenya Information and Communication (Interconnection) Regulations 2022 suggest that an operator is considered dominant if it controls more than 25% of the industry revenues or has significant market power that gives it an advantage over its rivals. Safaricom is certainly way past 25%, with near, or over, 80% of the voice revenue, data and SMS markets, and almost all of the mobile money market.

Because of the advantage this gives Safaricom, regulator the Communications Authority of Kenya (CA) plans to control Safaricom’s MTRs – the charges levied by a mobile service provider on other telecommunications service providers for terminating calls on its network. Safaricom will be permitted to charge fees to cover only the costs of interconnecting calls from its competitors. The smaller operators favour this as their users are likely to spend more time on other networks than their own.

Some formalities, such as an official declaration in the Kenya Gazette of Safaricom’s dominance, need to be completed, but Airtel and Telkom Kenya, which both want lower MTRs, will no doubt welcome the opportunity to negotiate better terms as required of Safaricom by the CA. Safaricom will also be compelled to show proof that its MTRs are based on actual costs.

The CA in December cut MTR rates from Sh0.99 to Sh0.12 per minute though, as we reported in January, Safaricom appealed the tariff review and has said that further reduction of the MTR charges would negatively impact its revenues and profitability.

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