Airtel backs CA’s push for mobile tariffs reduction

Airtel Networks Kenya wants the Communications and Multimedia Appeals Tribunal to uphold the decision to cut mobile termination rates (MTR), becoming the latest to oppose Safaricom’s #ticker:SCOM move to block the reduction.

MTRs are the charges levied by a mobile service provider on other telecommunications service providers for terminating calls on its network.

The Communications Authority of Kenya (CA) announced it will cut the MTR per minute to Sh0.12 from Sh0.99 at the start of this year but the decision was temporarily suspended after Safaricom filed an objection at the tribunal.

Airtel has joined the regulator in arguing for the implementation of the proposed MTR cut, saying that Safaricom is only interested in making money from its rivals given its large market share in voice services.

The second-largest telco says it pays Safaricom interconnection charges at an average of Sh300 million per month or Sh3.6 billion per annum.

“The ideal situation (as per the International Telecommunication Union -ITU) is that a network operator ought not to make a profit from an interconnection. Such charges should only go towards cost of infrastructural maintenance,” Airtel’s Head of Legal Lilian Mugo said.

She termed Safaricom’s reaction as a move to continue enjoying “unfair competition practices.”

The leading telco argued in its appeal that the regulator’s decision ignored the true cost of doing business. The company added that CA should have used a cost study to inform its decision and not the benchmarking method it relied on.

The regulator in its response said the benchmarking method is a stop-gap measure, adding that a cost study will be conducted at a later date and will be the basis of a further review of the tariffs.

Airtel said that by applying the interconnection charges, Safaricom receives more than 60 percent of the MTR pay-outs. Smaller players like Airtel, on the other hand, remain net payers of interconnect charges.

“In some of segmented tariff offers that we give to our customers, where 82 percent of the traffic is off-net, for every Sh20 received from the Airtel’s customer, Safaricom receives Sh16.24 as termination cost,” Ms Mugo said.

The case will be mentioned on February 16, 2022, for the tribunal to confirm whether Safaricom has filed its response and for further directions concerning hearing of the appeal.

The fight over the contested MTR cut has divided players in the telecommunications sector based on who stands to lose or benefit from the decision.