Kenya’s president suspends slashing of call rates

Mobile users in Kenya will once again have to wait longer to have the call rates reduced after President Mwai Kibaki intervened and stopped the planned slashing of Mobile Termination Rates (MTR).

According to reports, the president acted on behalf of two telecoms operators, Safaricom and the partly government-owned Telkom Kenya, stating that there should be no change in the MTR until a fresh study of the same is carried out.

The President issued the directive in a letter to Kenya’s Information permanent secretary Bitange Ndemo.

“This office has received communication dated July 11, 2012, from your minister authorising the acting director-general of CCK to effect the new MTR before conducting a study that will bring this matter to rest,” Business Daily quoted part of the directive signed by Nick Wanjohi, the President’s private secretary.

“I am directed, therefore, to inform you that until an all-inclusive study of costs and other relevant issues is undertaken and forwarded to this office for His Excellency’s consideration, the status quo should remain,” the statement went on.

MTR isthe amount of money mobile phone operators pay each other for calls originating from rival networks.

Safaricom had earlier expressed dissatisfaction with the proposed MTR, stating that a thorough study had not been done, considering the negative effects a similar move had on industry revenues when Airtel lowered its call rates, prompting the others to follow suit.

CCK reports indicate Safaricom as the biggest beneficiary of the current termination rates, having earned KSh868.9 million three months to December, while its main rival Airtel paid out KSh544.2 million (USD 6.56million), Essar Ksh192.5 million (USD 2.32million) and Telkom Kenya Ksh21.3 million (USD 0.26million).

MTR dropped from KSh4.42 in June 2009 to Sh2.21 (US$ 0.03) in July 2010 and was to drop further to Sh1.60 (USD 0.02) a minute, effective July 1. This however did not happen as the CCK’s board failed to approve the new rates on time.

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