Before 2022 started, the Communications Authority of Kenya (CA) announced plans to cut call termination rates, also referred to as mobile termination rates (MTRs) from KES 0.99 to KES 0.12 per minute.
The new rates were supposed to go live on Jan 1, 2022. However, the development was disputed, mainly by Safaricom, which argued that the rates were not arrived at procedurally and that the CA failed to take note of stakeholder input submitted previously.
Telkom Kenya, and Airtel Kenya, on the other hand, continued to support the new termination rates, with the overall argument being that the consumer will pay less when making calls, especially to other networks.
How high termination fees favour Safaricom
Data shows that 95% of Safaricom’s total traffic is on-net and only 5% is off-net, while for Airtel, 80% of its total traffic is on-net and 20% off-net.
During the assessment period (for the 2020/2021 FY), Airtel’s off-net minutes in the quarter ending June 2020 was slightly over one billion minutes, Telkom had 200 million minutes, and Safaricom has approximately 500 million minutes’ worth of off-net traffic.
The total off-net traffic for all operators for that period was 1.7 billion minutes. Of these, 1.4 billion minutes were the off-net traffic from Airtel to Safaricom.
This clearly indicates that more than 80% of the industry’s total off-net minutes flow towards Safaricom’s network.
This means that for every one minute received from Safaricom, Airtel sends 2.8 minutes to Safaricom.
Thus, the bulk of off-net traffic moves in the direction of Safaricom, making Airtel the net payer of interconnection dues.
This is also the same relationship between Telkom and Safaricom.
The outcome is that Safaricom not only reaps heavily from a high share of on-net traffic at 95% as said above but also is the net beneficiary of MTR pay-outs by both small operators.
The issues raised above delayed the rollout of the reduced mobile termination rates.
This forced the industry to investigate the fees via the Communications and Multimedia Appeals Tribunal (CITAM). The assessment has been going on since December 2021.
Now, CITAM arrived at termination fees that have since been supported by Telkom Kenya.
The charges will not be reduced from KES 0.99 to KES 0.12 as proposed by the CA before; they have actually been raised to KES 0.58.
The fees have already gone into effect (from August 1, 2022), and will revised one year later.
While the initial fees could have gone a long way in reducing the amount of money Kenyans spend on phone calls, the new number is not as high, and will likely benefit all parties, especially smaller telcos that pay hundreds of millions to Safaricom to settle mobile termination charges.