This archive report was first published on 24 January 2022.
On December 2021, Communications Authority of Kenya Director-General Ezra Chiloba announced a reduction of the Mobile Termination Rate (MTR), which has been a contentious issue in the telco industry. The regulator has since doubled down on this decision, arguing that it is necessary to level the playing field.
The MTR is the rate telcos charge each other for interconnecting customers. The review was announced by Chiloba in December 2021 and was to take effect at the start of the year. However, Safaricom moved to court to stop the slashing of the mobile termination rate (MTR) by 87.7% – to Ksh0.12 per minute from Ksh0.99 per minute.
According to the Communications Authority of Kenya, Safaricom's ability to regularly offer discounts and promotions on voice services at rates lower than the MTR is due to their low cost of operations. The regulator argued that it was practically impossible for smaller players to compete.
“In fact, in the years 2020 and 2021, the appellant (Safaricom) successfully ran a number of promotions and special offers targeting voice services where the effective discounted rate per minute for both on-net and off-net calls is as low as Sh0.2,” the Communications Authority of Kenya stated.
“Where the appellant prices its call rates below the Sh0.99 termination rate, it would be impossible for competitors to viably replicate such offers, given that they face the termination rate as a marginal cost,” they added.
The decision to lower the MTR reportedly came against the backdrop of intense lobbying from a section of telco operators. It was the first review of the MTR in six years. The rate has fallen consistently from Ksh4.42 in 2010 to Ksh0.99 in 2015 and, now, Ksh0.12.
