Telkom Kenya claimed it is forced to pay half of its revenues to Safaricom and other rival operators due to high rates for ending customer calls on their network, rendering the country a loss-making territory for the operator.
The company revealed this detail at a tribunal hearing where Safaricom has issued a legal challenge against the Communications Authority of Kenya (CA), for cutting mobile termination rates (MTRs) and fixed voice termination rates (FTRs) in the country, reported Business Daily.
Telkom Kenya said it was unable to compete due to mobile termination rates (MTRs) and fixed voice termination rates (FTRs) in the country. MTRs and FTRs are charges levied by an operator to another telecommunications provider for terminating calls in its network.
The authority cut MTR and FTR charge rates from KES0.99 per minute to KES0.12, after a six-year freeze in rates.
Safaricom took issue being the largest operator and earned the most revenues from MTRs due to its majority voice market share which is around 68.9%, reported Business Daily.
Telkom Kenya said the cut will spur competition in the Kenyan markets and provide cheaper calling rates for customers. The operator and rival Airtel are supporting the CA in this tribunal.
Telkom Kenya head of public policy and regulatory affairs Stellar Wawira, told the tribunal hearing: “Telkom had previously raised concerns that over 50% of its mobile communications revenue is paid to other telecommunications operators in settling expenses associated with MTRs and FTRs costs.
“I believe that CAs determination to reduce costs of MTRs and FTRs is in the interest of the consumers whom the CA has an obligation to protect.”