Mobile telecommunication firms are set to open a new battle-front with the communications regulator after they appealed to be exempted from paying licence fees at the current rates, citing reduced earnings. The operators, through their lobby –Kenya Telecom Network Operators (KTNO) – appealed to the Information ministry for new lower frequency rates to apply from July last year and not the coming July.
The Communications Commission of Kenya (CCK) lowered frequency licence fees by 41 per cent in December, to take effect from July 1 this year – meaning that the operators are expected to pay the old rates upto June 2012.
“Whilst we are extremely appreciative of these efforts (lowering the fees), we believe that it would be beneficial to have an earlier implementation date in order to curb the cost challenges,” read a December 19 petition by the operators to the Information ministry permanent secretary Bitange Ndemo.
Dr Ndemo yesterday said the State was looking at the application even as CCK insisted that the frequency rates will not be backdated to July 2011 – putting the regulator on a collision course with the operators.
This will be the latest in a series of differences between the regulator and the operators including the implementation of the new competition laws, the review of interconnection rates, mobile number portability and the switching off of fake handsets.
Kenya’s call rates came down by more than 50 per cent in August 2010 after Safaricom’s rival, Airtel, halved its call rates to Sh3 with the drop in Mobile Termination Rates – the fee that telecoms operators charge each other for calls terminated on their rival’s network – to Sh2.21 from Sh4.42.
Safaricom and Telkom Kenya made similar cuts, but warned that the low tariffs were risking future investments in the industry.
This was best captured by Safaricom’s half-year earnings that dropped 47.4 per cent to Sh4 billion—the first drop since it opened shop in 1999. Airtel, Yu and Orange remain in the red.
Safaricom has been paying more than Sh2.5 billion annually on the frequency charges while Telkom Kenya and Essar’s Yu each pay Sh1 billion and Sh400m.
The operators reckon they can use the savings accrued from backdated charges to roll out services in rural areas, where the government has been eager to take the Internet.
“In consideration of the Government’s favourable response to this proposal from the industry, it is the undertaking of our members that 10 per cent of the financial stimulus will be directly applied to the ongoing initiatives in Northern Kenya,” the operators said in their petition. [email protected]
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
