Safaricom case to block CA mobile tariff slash starts


Safaricom PLC headquarters in Westlands, Nairobi. PHOTO | DENNIS ONSONGO | NMG

The Communications and Multimedia Appeals Tribunal is Wednesday set to start hearing a case in which Safaricom has petitioned it to block the sector regulator's decision to cut mobile termination rates (MTR) to Sh0.12 per minute from the current Sh0.99 per minute.

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

The CA has said the cut will have a positive impact on both consumers and operators, adding the review will reduce the need for consumers to own multiple SIM cards as charges across networks come down.

But Safaricom while appealing the decision argues the move to cut the charges will negatively impact its revenues and profitability and occasion its financial loss. 

Safaricom earns an estimated Sh6.5 billion annually from MTR while paying out Sh2.6 billion to rivals, leaving it in a profitable position while competitors remain in a net losing trade.

Both Airtel and Telkom have backed the regulator's decision, saying it will ensure a level-playing field for all, while protecting the commercial interests of smaller operators.

Following Safaricom's application, the tribunal chaired by Rosemary Kuria suspended CA's decision on the cuts until the case is heard and determined from Wednesday. The cuts were expected to be implemented from the start of this year.

The sector regulator says in its response to a petition filed by Safaricom before the tribunal that it plans to conduct a more detailed network cost study of mobile termination rates, suggesting it could consider a further review. 

The Consumers Federation of Kenya, Airtel Kenya, and Telkom Kenya have joined the legal fight throwing their weight behind CA.

Airtel and Telkom had earlier criticised Safaricom for seeking to scuttle the recently announced reduction in MTR, accusing the leading telco of only being interested in protecting its revenues from rivals.  

A smaller operator tends to pay more in mobile termination rates because its users are likely to spend more time on other networks than its own.

Industry data shows that the rate has been falling gradually from a high of Sh4.42 in 2011 to the just reviewed Sh0.99, which has been in place since 2015, marking a freeze of more than five years amid intense lobbying by some top telcos.

The CA says the recent cut in mobile termination rates will give smaller telecoms operators a better chance at competing with market leader Safaricom, even as it has hinted at a further drop in call tariffs.

The regulator says the revised rates will give small operators greater price flexibility to compete with the market leader- Safaricom and benefit consumers.