Matiang’i rules out Safaricom reprieve from licence terms

ICT secretary Fred Matiang’i has vowed to tie the renewal of Safaricom’s licence to the voice quality checks that show the mobile phone operator is non-compliant.

Dr Matiang’i said the government and the Communications Commission of Kenya (CCK) will not negotiate on the voice quality standards.
The communication regulator found that all the four mobile phone operators, including Safaricom, Airtel, Orange and Yu had failed to meet minimum quality of service standards in the year to June.

It has tied the renewal of Safaricom’s licence, which is due before June, to paying Sh2.3 billion and achieving the voice tests— a condition the Nairobi bourse- listed telecom operator has termed as punitive.

READ: CCK asks Safaricom to pay Sh2.3b for licence renewal

“I don’t understand why an operator would like to negotiate a licence condition. There are only two options here, either comply or step out of the business,” Dr Matiang’i told the Business Daily on the sidelines of the launch of the electronic filling of returns by insurers to the Insurance Regulatory Authority.

“I am happy with what CCK is doing and we (the ministry) are in full support of their efforts to ensure that all operators comply with the rules. We are going to act according to the law to ensure that the operators meet licensing conditions.”

The government owns a 35 per cent stake in Safaricom, Vodafone (40 per cent) and remaining 25 per cent is held by investors at the Nairobi bourse.

The CCK expects the operator to achieve a score of 80 per cent on the eight indicators including speech quality, completed calls, call success rates and call drop rate.

Safaricom, Airtel and yuMobile tied on a score of 50 per cent in the year to June while Telkom Kenya had a 62.5 per cent mark.

In 2012, Safaricom had the worst score of 50 per cent while Airtel was rated at 62.5 per cent. Telkom and Essar both achieved 87.5 per cent.

CCK attributed the drop in performance to the enhancement of the weight of the eight indicators including speech quality, completed calls, call success rates and call drop rate.

“The current assessment framework uses the enhanced KPIs that were applicable three years after the adoption of the framework,” says the CCK.

Safaricom has previously questioned the CCK indicators, terming them erroneous, adding that an independent report based on international benchmarks had given it a clean bill of health.

READ: Safaricom, CCK clash over licence renewal terms

The operators are currently fined Sh500, 000 for breach of the quality of service standards and the State is looking to raise the fines, saying the current penalty is too lenient and has failed to make the operators comply. The fine accounted for a tiny fraction of Safaricom’s Sh124 billion sales in the year to March.

Kenya is seeking to follow in the footsteps of Nigeria, Zambia and Rwanda, which introduced hefty fines against operators that fail to meet quality checks.

But for Safaricom, the quality checks are critical this year given that it will form part of the talks that will lead to the renewal of its operating licence.

“The renewal of the licence shall be dependent on Safaricom’s commitment to adhere to the set minimum quality of service standards by June 30, 2014 and successful conclusion of negotiations on the new terms and conditions,” Francis Wangusi, CCK director-general, said earlier.

Since its licensing in July 1999, Safaricom has had a great impact on the Kenyan economy with innovative products like M-Pesa, Okoa Jahazi and M-Shwari besides controlling 80.2 per cent of Kenya’s mobile phone voice traffic.

Airtel and Essar hold 10.4 per cent and eight per cent of the market share respectively.

Safaricom reckons that it only failed to meet the 80 per cent limit on one indicator — speech quality.

“We additionally welcome the fact that CCK has responded well to operator feedback on the methodology and has gone out to tender for new equipment and skills in this area which will benefit everyone including customers and operators because it will be easier to identify and remedy weak areas,” said Safaricom in a statement.

“Safaricom has consistently stated that it is investing substantial amounts of money to improve its network infrastructure. This FY (financial year) alone, we have committed Sh27 billion towards this goal.”

The firm has laid own inland fibre optic cable, upgraded most of its sites to 3G and is pushing CCK to award it additional frequencies to rollout 4G network for high-speed wireless services.