CCK delays lower termination rates over board hitch
Posted Monday, July 2 2012 at 21:24
The reduction in the rate mobile phone operators pay each other for calls originating from rival networks has been delayed on failure by the board of Communication Commission of Kenya (CCK) to approve the new charges.
The mobile phone operators, the CCK and Ministry of Information had agreed in May to cut the Mobile Termination Rate (MTR) rate to Sh1.60 a minute to take effect on Sunday from the current Sh2.20—in what was to end the one-year freeze and reduce the cost burden on smaller operators.
Francis Wangusi, the acting director general of CCK, said the new rates have been delayed after the regulator failed to approve them last week.
“I submitted the rates for approval and had expected a meeting to deliberate on this to happen in the course of last week but which I understand never took place,” said Mr Wangusi in a telephone interview with the Business Daily.
“The board has not given us any reason why this has not happened and as such we will just have to wait since it’s only them who can approve the new rates.”
The MTR of Sh1.60 was arrived at as a compromise fee given that Safaricom was calling for a high fee while the CCK and the other three operators—Airtel, Telkom Kenya and Essar’s Yu—were keen on Sh1.44.
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 President Mwai Kibaki froze it for one year following intense lobbying from Safaricom and Orange.
The downward review in 2010 gave the operators room to cut their tariffs by more than half, but the telecommunication firms have ruled out lower call rates following the reviewed termination rates and will instead absorb the cost savings.
Safaricom has been the only operator that has benefited for the current termination rate. The CCK said that Safaricom earned Sh868.9 million from the rate in the three months to December while its main rival Airtel paid out Sh544.2 million, Essar (Sh192.5 million) and Telkom Kenya (Sh21.3 million).
On Thursday, Essar said the delay would hurt the smaller operators.
“yuMobile is disappointed by the delayed implementation of the reduced MTR,” said Madhur Taneja, Essar’s country manager.
“It is inevitable that the delayed implementation will only benefit the dominant player and will lead to reduced revenues for other players as they continue to pay the higher rates. This is a big blow to the industry and the younger players like yuMobile who have pushed for a level playing field.”
Safaricom remains dominant with 67.7 per cent of Kenya’s mobile phone subscribers. Airtel has 15.7 per cent, Orange 10.4 per cent while Yu trails with 6.2 per cent.
Safaricom, which has been against low termination rates, said there was no alarm.
“There is no emergency as far as we (Safaricom) are concerned, the CCK Board will consider the matter in due course together with representations made by all stakeholders and advise the industry accordingly,” Nzioka Waita, director corporate affairs at Safaricom.