Telcos seek lower cost of acquiring airwaves

Safaricom PLC CEO Peter Ndegwa during the telco's 20 year celebration at the Nairobi Serena Hotel on October 27, 2020.

Photo credit: Diana Ngila | Nation Media Group

What you need to know:

  • Safaricom and Airtel paid $25 million (Sh2.53 billion) licence fee for 4G Internet spectrum in 2017 and 2018 respectively.
  • Safaricom, Telkom Kenya and Airtel launched the high-speed service in 2014, 2017 and 2018 respectively.

 Telecommunication service providers have called for a review of the cost of airwaves by the sector regulator to enable them roll out cheaper services to consumers.

Market leader Safaricom and its closest rival Airtel Kenya, argue that, the Communications Authority of Kenya (CA) needs to ensure companies can compete fairly in acquiring airwaves, and that customers have a strong choice of affordable mobile networks.

They say there is need for the government to strike a balance between raising billions of shillings from a sector already straining to reduce costs, while stimulating investment in the rapid deployment of new services such as fifth-generation (5G) mobile internet services, which have higher speeds.

“The spectrum fees need to assist operators in striking a balance between efficient use of the resource and the cost of the service to the customers,” Safaricom said in its written comments to CA, the current spectrum charging methodology fails to strike that balance.

This is because TRX (transceiver) cost remains high, impeding investments in the sector.

Airtel Kenya concurs, adding, “excessive fees can impede policy goals of delivering broadband access to everyone and lead to valuable spectrum remaining unsold...

“There is a strong economic case to avoid the level of spectrum fees being determined on the basis of revenue-maximising objectives,” Airtel said in its comments to CA.

Airtel suggested that spectrum fees “be used to help recover the administrative costs of licensing and managing spectrum. Spectrum fees should thus reflect the socio economic objective of ubiquitous broadband connectivity.”

Spectrum management

The telcos’ comments follow CA’s recent publication of guidelines that will inform the basis for spectrum management in Kenya.

Safaricom and Airtel paid $25 million (Sh2.53 billion) licence fee for 4G Internet spectrum in 2017 and 2018 respectively.

Safaricom, Telkom Kenya and Airtel launched the high-speed service in 2014, 2017 and 2018 respectively.

Safaricom plans to launch Kenya’s first 5G mobile internet services targeting major urban centres.

bnjoroge@ke.nationmedia.com

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