Airtel appeals to Kibaki, Raila on connection rate

Airtel has written to the two principals, President Kibaki and Prime Minister Raila Odinga, seeking intervention on the ongoing tussle between telecoms over the mobile termination rate (MTR).

In two separate letters dated August 29, Airtel managing director Shivan Bhargava is seeking audience with the two principals to discuss the government’s failure to effect agreed rate cuts to the tariff that mobile operators pay for terminating calls in their rival’s network.

In July last year, the MTR was supposed to fall to Sh1.44. However, President Mwai Kibaki ordered CCK to halt the glide path at Sh2.21 in a move that was seen as favoring Safaricom and Telekom Orange.

In a communication seen by the Nation, Mr Bhargava accuses the government of reneging on promises made when Bharti Airtel entered Kenya two years ago.

He claims that the Indian firm’s investments in the market were based on assumptions of a liberalised sector and on the government’s promise to lower MTR.

“The change in government policy, before full implementation, has resulted in significant losses to our business as our business is now forced to meet costs that were not anticipated,” said the letter signed by Mr Bhargava.

The glide path is informed by a 2010 policy document that advised lowering of interconnection rates to an eventual Sh0.99 by July 2013.

When the glide path was first implemented in 2010, mobile tariffs fell by more than 50 per cent.

This is the latest turn of events in a series of intrigues that have seen the executive accused of meddling in the affairs of CCK on behalf of special interest groups.

Telecoms had agreed to lower the MTR to Sh1.60 in May this year.

A week ago, it emerged that President Kibaki, through his private secretary Nick Wanjohi, had once again intervened and ordered CCK not to implement the new MTR until a cost-study had been undertaken.

“Recent developments are likely to scuttle the implementation of an agreement that was reached by all industry players,” Mr Bhargava says in the letter.

Safaricom and Telekom Kenya have maintained that the MTR should not be changed until a study commissioned in January this year is completed. On the other hand, Airtel and YuMobile have argued that the status quo favours the market leader.

According to the August 29 letter from Airtel, the firm had requested audience with Prime Minister Raila Odinga in June and July last year. The prime minister had allegedly promised to intervene in the matter, to no avail.