Communication Authority of Kenya wants an appeal by Safaricom challenging the decision to cut Mobile Termination Rates (MTR) dismissed.
The regulator argues that before taking the action views from all stakeholders were taken into account.
The CA Director General Ezra Chiloba states that the reduction was determined after the necessary procedure and substantive consideration and want Safaricom's appeal dismissed with costs.
Safaricom has filed the matter before the Communications and Multimedia Appeals Tribunal.
“Granting relief sought by the Safaricom would unjustifiably fetter the discretion of it granted in section 5A of KICA [Kenya Information and Communications Act] in the exercise of its powers, performance of its functions and objectives of the tariff regulations,” Chiloba argues.
MTR are the charges levied by a mobile service provider on other telecommunications service providers for terminating calls in its network.
The CA cut the charge to Sh0.12 per minute from the current Sh0.99 per minute after a six-year freeze. The capping was to start on January 1
Safaricom that earns the most from MTR due to its large voice market share of 68.9 percent challenged the move before the Multimedia Appeals Tribunal.
The regulator told the tribunal that upon requisite public participation, it retains the discretion to ultimately determines the methodology to adopt in reviewing MTRs and Fixed Termination Rates.
“This is consistent with the provisions of section 5A of the KICA that the CA shall be independent and free of control by government, political or commercial interests in the exercise of its powers, performance of its powers and in the performance of its functions," lawyer Wambua Kilonzo told the tribunal.
CA further said Safaricom has not demonstrated the extent to which, if any, that it is not able to recoup its incremental costs for interconnection with other.
“In fact, it has demonstrated that in the years 2020 and 2021, even with the current interconnection rate of Sh0. 99, 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,” CA told the tribunal.
The CA dismissed Safaricom's argument saying that the disputed MTRs and FTRs promote effective competition and Safaricom has not demonstrated the contrary.
The tribunal heard that from its analysis of stakeholder impact, it was concluded that lower voice termination rates would facilitate great retail price flexibility and facilitate in the overall price levels for mobile services to the benefit of consumers.
On the impact on the industry, CA determined that the proposed revisions would lead to reduced net transfers which is imbalanced.
CA added that Safaricom enjoys economies of scale and their costs are low compared to other small operators and proposed low termination rate will give small operators greater price flexibility to compete with Safaricom.
The authority also analysed the potential impact of the reduction in MTRs on the revenues of three MNOs in Kenya, Safaricom, Airtel and Telkom Kenya ltd using voice traffic patterns for the quarter ended June 30,2021.
Last year December, Safaricom appealed the decision by CA to cut the mobile termination rate (MTR) by 88 per cent, terming the move unprocedural.
The telco wants the CA's decision to cut the rate that telcos charge each other for interconnecting customers from Sh0.99 to Sh0.12 declared invalid and set aside.
