CCK headquarters in Nairobi. CCK has maintained that it will not carry a fresh study and that an internal assessment of the MTR indicate that it should fall—a move that has also been opposed by Safaricom. Photo/File
Mr Francis Wangusi, the acting CCK director said last week Wednesday that the termination rate — the amount of money an operator pays rivals if its subscribers call another network — will drop to Sh1.44 per minute in July from the current Sh2.21.
But on Friday, Information permanent secretary Bitange Ndemo, a director in CCK, said a fresh study must be done to determine the rates, arguing that Mr Wangusi is going against President Mwai Kibaki’s directive.
The rate fell from Sh4.42 in June 2009 to Sh2.21 in July 2010 and was to drop to Sh1.44 last June before Mr Kibaki froze it for one year following intense lobbying from Safaricom and Orange.
“CCK cannot go ahead and implement the termination rates without conducting a fresh study where all operators are involved, I will not pass a policy matter where some parties are not consulted,” Dr Ndemo said in an interview with Business Daily.
“The CCK board sat four weeks ago, a meeting which I personally attended and what was agreed upon was that it conducts a study in line with the presidential directive that will help determine way forward on MTR, so it is wrong for CCK to turn round.”
The CCK has maintained that it will not carry a fresh study and that an internal assessment of the MTR indicate that it should fall—a move that has also been opposed by Safaricom.
“We have done a study internally that actually shows the lower rates had positive impact to the larger economy and I am just waiting to get a nod from the CCK board to lower the rates to Sh1.44 in July,” said Mr Wangusi last week.
The hardening of positions has sparked a battle that will boil over at CCK’s board seating set for this month where Mr Ndemo and Mr Wangusi will flex their muscles.
Besides Dr Ndemo and Mr Wangusi, other CCK directors are Joseph Kinyua (PS Treasury), Francis Kimemia (PS Internal security), John Omo (the company secretary), Philip Okundi (chairman) and five others drawn from the private sector.
The bulk of directors drawn from government tend to side with Dr Ndemo, this means that the votes from those drawn from the private sectors are likely to be the decisive factor should MTR debate be put to the ballot.
Safaricom says the current termination rates are based on an outdated model and asked CCK to carry out a fresh study that will reflect the cost of doing business in Kenya’s voice market in line with Uganda and Tanzania.
Its rivals Airtel and Essar are pushing for lower termination rates, arguing that they are paying Safaricom a huge chunk of their revenues since it handles the bulk of the cross network call due to its dominance in the voice market.
