IN SUMMARY
- Two weeks ago, officials from Airtel and Essar’s Yu sought the intervention of President Kibaki and Prime Minister Raila Odinga in the freeze of the Mobile Termination Rate (MTR).
- It was the second time that the two operators were seeking such intervention, the first was in June last year.
- The industry regulator, the Communications Commission of Kenya (CCK), also found itself in a dilemma, especially after the Consumer Federation of Kenya (Cofek) issued a warning that it would sue CCK if the regulator implemented a lower MTR before a fresh study is conducted.
- Both Mr Kibaki and Mr Odinga have indicated that they are keen on the implementation of the MTR after a study has been done, a view held by Safaricom and Telkom’s Kenya Orange in which the government has substantial shares.
- On June 8, 2011 Mr Odinga received a report from the taskforce on the Mobile Telephone Industry Business in Kenya. Among the key recommendations made by the taskforce were that CCK undertakes a review of the existing MTR glide path in consultation with operators.
- Six days before Mr Odinga received the taskforce’s report, Mr Kibaki had issued a directive to the CCK board freezing further cuts in the MTR.
- In appealing to the government, the operators were divided into two opposing camps. Airtel and Yu were pushing for a further reduction in MTR to enable them drive the price war home as a strategy aimed at grabbing more market share. Safaricom and Telkom Kenya were opposed to a reduction in MTR, aware that it could lead to an erosion in their market shares.