A few years ago, Jamii Telecoms entered into the 4G space.
Part of that development, which received wide attention in Kenya, was that its plans were, and still are dirty cheap. Kenyans, in their norm, do not fail to embrace a product that sees them save money, which is why the launch was a boom, although limited to very few spots in the country in terms of availability.
Another part of the launch was about policy and politics.
See, JTL acquired the license by paying a fraction of what others paid. Safaricom and Telkom Kenya, for instance, parted with KES 2.5 billion each for 800 MHz – and they raised concerns about preferential treatment.
However, spectrum vendor the Communications Authority of Kenya (CA) had an explanation for everything.
When JTL acquired the spectrum, it paid KES 100000, which was like pocket change compared to other paid fees.
The cause was that JTL’s frequency was given because it is a Tier 2 company, unlike other telcos that qualify as Tier 1 companies.
The CA also said that JTL’s frequency (band 700 MHz, not the same as Tier 1 companies) was issued on a ‘trial basis.’
Later, it would emerge that JTL had actually appealed to the CA to pay the full amount, but over a 10-year period. The appeal was sent to parliament as a proposal to amend part of the Kenya Information and Communications Act, and members of the House deliberated over it. Their inputs were summed up into law, which was signed on January 2019.
The law further stipulated that companies whose majority stake is controlled by Kenyans can pay license fees in equal instalments over a 10-year period. Therefore, JTL and Finserve Africa’s Equitel can pay, say, KES 250 million each year for a 4G license. Airtel, Telkom, and Airtel, which are primarily owned by Bharti Airtel India, Helios and Vodacom will not benefit from this deal.
The amendment also stated that instalments were only enforceable for license fees of over KES 1 billion.
JTL finally acquired the license in April 2019. It paid KES 250 million upfront, as well as an additional KES 11 million named ‘frequency fees.’
A new development is a notice from the CA to JTL.
JTL, popularly known as Faiba has applied for a Tier 1 spectrum license.
We are not sure if the ‘trial phase’ has elapsed, or the management of the company has changed to warrant the notice.
‘Any objections to issuance of licence be filed with the Authority by 18 December 2020 and a copy provided to the applicant,’ reads the notice.
Whether JTL will still pay for the fees over the agreed period is something we will have to wait and see.
A fortnight ago, Safaricom and Airtel Kenya wrote to the CA about high spectrum fees.
Both Safaricom and Airtel said that CA’s current structure does not allow companies to compete fairly in the telecom space.
Airtel Kenya argued that ‘there is a strong economic case to avoid the level of spectrum fees being determined on the basis of revenue-maximising objectives.’
These discussions are timely because soon, the operators will start exploring 5G launch.
The cost of 5G spectrum is yet to be communicated.