It has now been projected that Kenya's giant telecommunication company Safaricom is set to lose Sh2 billion in the financial year ending March 2023.
This is after the government, through the Communications Authority of Kenya (CA), cut Mobile Termination Rates (MTR) by 41.4 per cent.
For starters, Mobile Termination Rate (MTR) is a charge that one telecom operator charges another when the latter’s calls terminate on the former.
Suppose you make a call from an Airtel number to a Safaricom number, in addition to the call rates that you pay to Airtel, Airtel also pays a certain fixed amount to Safaricom to be able to complete your call and connect you to the Safaricom number.
CA reduced the MTR by 41.4 per cent which saw the rate in August cut from Sh0.99 per minute to Sh0.58 per minute.
In other words, Safaricom was making at least Sh0.99 per minute any time Airtel, Telcom or Equitel lines called any Safaricom number.
Since the amount was reduced to Sh0.58 per minute, Safaricom started losing a huge amount of money per day.
“Interconnect revenue has declined coming from the MTR impact that we have seen in the first two months of the year.
“The full-year impact of MTR this year, just on a direct basis, which is the interconnect revenue drop, is around Sh2 billion," Safaricom boss Peter Ndegwa said in a call with investors and analysts on November 11 as reported by Business Daily.
Business Daily reports that the projected Sh2 billion drop in eight months translates to an average of Sh250 million per month, or simply Sh8.3 million per day.
While Safaricom is counting losses per day, it is its competitors who are smiling all the way to the bank. This is because the likes of Aitel, Telcom and Equitel are saving what they used to pay to Safaricom because of the higher MTR.
CA wanted to cut MTR to Sh0.12 per minute but after a court battle with Safaricom, the two parties reached a middle ground of Sh0.58 per minute.
The projected loss is already sparking mixed reactions on social media, with some leaders already saying Safaricom could record its first loss in history.
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