Kenyan mobile telephone operators in tussle over US$10 million debt

Safaricom, a top Kenyan mobile telephone operator, has moved to court in a bid to recover almost half a billion Kenya Shillings owed to it by its rivals Airtel Kenya and Essar for non-payment of termination fees, the amount of money an operator pays rivals if its subscribers call another network.

Safaricom says Airtel has not paid it since October 2011. This totals up to close to $6 million. Essar also owes Safaricom KSh150 million (US$1.8million).

Safaricom wants the rivals to pay interest on the debt saying the delayed payments have hurt its cash flow.

The average interest base-rate stands at 20.34 percent. This will see the figure set for payment to Safaricom accrue to about US$10 million if granted by the court.

Safaricom is also accusing Airtel of contravening the July 2002 interconnection agreement that states that operators must prepare a billing statement and tax invoice for interconnection charges and forward the same to the other party within two weeks of every month. Airtel has since failed to respond to the suit.

The tussle comes following the revival of the debate on termination rates. The acting Communications Commission of Kenya (CCK) director Francis Wangusi had earlier last week said termination rates would drop to KSh1.44 per minute in July, from the current Sh2.21.

Kenya’s Information permanent secretary Bitange Ndemo, also a CCK director, is however opposed to the idea.

CCK statistics show Safaricom is the biggest beneficiary of the interconnection charges, since Airtel subscribers make more calls to rivals than within their network, leaving it with a bill of KSh948 million — with the bulk owed to Safaricom.

Safaricom is still the dominant company in the Kenyan market with 67 percent. Airtel has 15.2 per cent, Orange 10.3 per cent while Yu trails with 7.9 per cent dominance.

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