The Kenyan government wants to control the rates that Safaricom charges rivals for terminating calls on its network to protect small telecommunications firms.
The new regulations set by the state seek to bar dominant telcos from making profits from mobile termination rates (MTRs). In this regard, Safaricom will now charge fees to cover only the costs of interconnecting calls from its competitors.
MTRs, according to Business Daily, are the charges levied by a mobile service provider on other telecommunications service providers for terminating calls on its network.
The Kenya Information and Communication (Interconnection) Regulations 2022 set the stage for the Communications Authority of Kenya (CA) to control Safaricom’s rates of interconnecting calls. However, this will only happen if Safaricom controls more than 25 percent of mobile services revenues.
Airtel and Telkom Kenya say that the current rates are making it difficult for them to compete with Safaricom.
“A dominant telecommunications licensee shall adopt the cost-based charges for interconnection as set out by the Authority from time to time,” the new regulation states.
“A dominant telecommunications service licensee shall set charges for interconnection based on an objective criterion, observe the principles of transparency and cost orientation,” it states.
Telcos will still be able to negotiate MTR rates. However, if the bigger telcos fail to strike a fair deal with the smaller ones, the CA will be forced to set lower rates to allow the smaller telcos to compete with the dominant ones.
Safaricom has surpassed the 25 percent share of revenues according to the latest industry data from the CA.
Telcos made Sh280.1 billion ($2.4-billion) in revenues from the sector, with Safaricom taking 82.4 percent of the voice revenue, 78.4 percent of data, 83.8 percent of SMS, and 97 percent of other mobile services.
Airtel has also come forward with figures that it pays Safaricom. It pays Safaricom Sh300 million ($2.6-million) per month or Sh3.6 billion ($31-million) per annum in MTRs, highlighting the hostile effect of the high rates on their businesses.
By Zintle Nkohla
Follow Zintle Nkohla on Twitter
Follow IT News Africa on Twitter