Communication Authority proposes cut of Mobile Termination Rates

The government has defended its stand against declaring Safaricom a dominant player saying the telco has lost more than 20 percent of its market share in the last decade. 

Information Cabinet Secretary Joe Mucheru has told a Senate committee that Safaricom’s annual termination fees stand at one billion shillings against 300 billion paid by the industry in interconnection fees payouts.

The Communications Authority of Kenya has proposed to cut Mobile Termination Rates (MTR) to 0.12 shillings from 0.99 shillings, saying it will benefit consumers and ensure business continuity for network providers. 

MTR is the price that a mobile telephone operator charges another mobile operator for terminating its off-net calls on its network and its reduction is expected to give small operators price flexibility.

ICT CS Joe Mucheru has told the Senate Committee on Information and Technology, the tariffs reduction and competition in the country’s telco space do not display dominance tendencies by any market player.

According to the Communications Authority CA, termination rates are not meant to be income-generating streams but cost recovery mechanisms.

The Competition Authority of Kenya says its analysis on the impact of a review of termination fees on industry players was based on their revenues, levels of profitability, and sustainability. 

According to the watchdog, lower voice termination rates would facilitate greater retail price flexibility, which should facilitate a reduction in overall price levels for mobile services benefiting consumers.

Small players had requested a review of the current MTRs to at least 0.15 shillings to enable them to offer discounts as low as those offered by Safaricom, whilst still maintaining their profitability.