Standoff looms as Safaricom, Airtel oppose new levy
ICT secretary Fred Matiang’i (left) with Communications Authority of Kenya director-general Francis Wangusi in November last year. PHOTO | FILE
What you need to know:
Mobile operators query directive for sector to remit nearly Sh2bn to the Universal Service Advisory Council (USAC) – an agency formed by the government to manage the funds.
The firms have raised concerns over a lack of representation on the Universal Service Fund (USF), financial governance and accountability of the fund to the contributors.
The USF levy became effective last July and is managed by an independent committee comprising of appointees of the ICT secretary.
A standoff is looming between telcos and the regulatory authority over a requirement for the firms to remit billions of shillings to the government for installing communication services in marginalised areas.
Safaricom and Airtel have questioned the requirement to remit nearly Sh2 billion to the Universal Service Advisory Council (USAC) – an agency formed by the government to manage the funds.
ICT secretary Fred Matiang’i has given the telcos up to the end of this month to pay up the amount equivalent to 0.5 per cent of their annual turnover, but the telcos have raised concerns over a lack of representation on the Universal Service Fund (USF), financial governance and accountability of the fund to the contributors.
“Whereas we are very keen to support the establishment of a successful universal service fund, it runs the risk of becoming just another tax that is levied on licensees of the CA (Communications Authority of Kenya), particularly due to the manner in which those expected to contribute to the fund have been side-lined from its formation,” said Safaricom corporate affairs director Nzioka Waita.
Safaricom’s position was echoed by Airtel which also queried the governance structure for administration of the fund.
“We had requested the Communications Authority to issue guidelines on the selection criteria for the projects that would be funded from the USF and the basis for the allocation of funds in order to ensure transparency and achievement of objectives to the benefit of consumers in the targeted areas,” said Airtel Kenya CEO Adil El Youssefi.
Speaking at a press conference last week, Mr Matiang’i said firms that do not submit the levy by the end of this month would be penalised.
Safaricom, Kenya’s largest telco, is expected to pay up to Sh733 million based on its annual turnover of Sh144.7 billion last year.
Other firms expected to pay up the USF levy include media houses such as the Nation Media Group, Standard Group, all Internet service providers and the Postal Corporation of Kenya.
“The USF levy became effective last July and the operators are required to have submitted their contribution for the year ending, we are asking those who have not done so to contribute by August 30 or risk penalties,” said Dr Matiang’i last week.
In a letter dated July 31 addressed to the ICT secretary, the telecom operators through their lobby group, Kenya Telecommunication Network Operators, are seeking clarity around the objectives of the fund and its governance.
The firms say the CA last July agreed to expand the membership of the USAC from six to nine to accommodate representatives from the telcos, broadcasting and Postal Corporation, but failed to do so when it named the board.
“We note that the authority has proceeded to issue invoices to our members in respect of the USF levy for the period from July 1, 2013. We are concerned about making payments into the USF prior to having our above pertinent issues addressed,” part of the letter by the lobby group read.
“We, therefore, request your intervention in ensuring that our above issues are addressed prior to the implementation of the USF,” it added.
The USF levy became effective last July and is managed by an independent committee comprising of appointees of the ICT secretary.
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