Still, the charges have been supported by small operators and ICT regulator the CA. The idea is that small carrier will have a better chance to compete in the market.
The CA has also added that it might consider reducing the charges further, a move that could see Safaricom lose substantial revenue from termination rates.
To note, Safaricom had filed a petition disputing the new charges as soon as they were announced. The leading operator argued that the rates were not developed procedurally, and the CA failed to consider public input when it adjusted the fees.
The case was filed before the Communications and Multimedia Appeals Tribunal.
Termination rates are basically wholesale tariffs levied by the telco of a user receiving a phone call to the operator of the caller’s network.
As part of the cost of a call between customers of different carriers, termination rates are part of your phone bill and are paid by consumers.
As stated by the CA before, termination rates have been adjusted to KES 0.12 per minute from KES 0.99 per minute and applied by both fixed and mobile operators for connecting calls on their networks.
To this end, Safaricom makes a substantial amount from termination charges because of its big market share. The voice market, for instance, favours Safaricom at 68.9 percent. This means that customers in other networks, namely Telkom and Airtel, make more off-network calls because their friends and family are using Safaricom.
To put this into perspective, Airtel pays nearly KES 300 million per month to Safaricom in termination fees (using the older rates). It, therefore, earned about KES 6.5 billion per year, while paying out only KES 2.6 billion to competitors.
These are some of the reasons that the rates were revised downwards, and according to a statement to Business Daily by CA Director General Ezra Chiloba, smaller players and customers will benefit from the development.
The rates were to live from January 1, 2022.
The petition will be assessed again on February 2, 20200.