The Communications Commission of Kenya (CCK) today announced a cut in mobile termination rates (MTR) following months of uncertainty about the move, flying in the face of protests from market leaders Safaricom and Orange.
Announcing the move in Nairobi today, the CCK revealed that MTR costs would be cut to KSh1.44 (US$0.016) – a 34 percent drop from the previous rate of KSh2.21 Shillings (US$0.025).
The new rate will be retroactive, effective as of July 2012, meaning that mobile operators will have to take steps to correct figures for the period since by issuing new invoices or credit notes reflecting extra sums received as a result of the retroactive decision.
The decision to cut MTRs in Kenya has been particularly controversial – with market leader Safaricom and rival mobile operator Orange uniting in an attempt to block the cut in rates through extensive lobbying while market underdogs Airtel and Yu Mobile have been actively demanding the cut.
The regulator had originally issued a determination in 2010 laying out an MTR decrease glide path which foresaw a yearly cut to rates. In the face of opposition and in response to worries about the effect of further cuts to Government revenues and the stability of the country’s stock market, the CCK revised the glide path in May 2011, freezing the 2010-2011 rate of KSh2.21 (US$0.025).
According to the revised determination, the cut to KSh1.44 (US$0.016) was due to take place in July 2012, but after intensive lobbying President Kibaki stepped in and decreed a further freeze to termination rate cuts.
Having instated a consultant to establish the national consequences of further cuts to MTRs in accordance with the glide path following the 2011 freeze, the CCK has finally bowed to pressure and instated the MTR rate that it has been delaying since May 2011.
“The board approved the new rates today after going through the KIPPRA report that shows the low MTR did not have a negative impact on tax collections, employment in the sector and on the Nairobi Stock Exchange,” Director General Francis Wangusi told attendees at the announcement today.