Safaricom and Airtel Kenya have been offered temporary two-year operating licences, pending agreements on permit fees, how to allocate spectrums and penalties for voice service outages.
The Communications Authority of Kenya (CA) opted not to grant the firms permits over the traditional 10-year period awaiting a review of regulations that would alter the country’s telecommunications landscape.
The review seeks to introduce the auction of spectrum to the highest bidder as opposed to the current regime where the regulator offers frequencies on request.
This will allow the CA to negotiate on higher spectrum fees from the bidding rounds and weed out speculators from the licensing market.
The regulator is also seeking fresh rules that will set quality standards as well penalties and compensation to consumers for data, SMS and voice service outages.
Telecoms operators are currently not compelled to compensate their subscribers for dropped calls, a legal gap that has shielded the firms amid high rates of network hitches in different parts of the country.
“We gave the firms two-year licences pending negotiations on payments for the permits, frequency allocation and quality of service,” CA director-general David Mugonyi told the Business Daily in a text message response.
“Negotiations will be for longer periods.”
Safaricom was offered a two-year permit from June 25 and paid $12.64 million (Sh1.63 billion) and another Sh6 million, said the CA.
Airtel Kenya paid $3.82 billion (Sh494.2 million) and an extra Sh6 million, pushing its bill to half a billion shillings for a two-year licence running from next January to 2027.
Previously, the telecoms operators paid Sh2.3 billion to the industry regulator for their 10-year permits.
Mr Mugonyi said Airtel’s fees were lower because it has fewer spectrums compared to Safaricom—the dominant operator.
Safaricom has downplayed the shorter and temporary licence.
“We were just given an extension so that we complete the process of full renewal, including whether the tenure will be 10 or any other term that the regulator may determine,” said Peter Ndegwa, the Safaricom CEO.
“At this stage, there is nothing to read from the two-year extension except to give enough time to do the renewal in the right way.”
The firms have previously expressed concerns over the measurement of quality checks and customer compensation for the breaches.
An expired Bill had sought to compel telecoms operators to pay customers up to Sh30 per day for dropped calls for voice service outages.
It required Safaricom, Airtel and Telkom Kenya to refund callers a maximum of Sh30 per day for up to three dropped calls daily.
The proposed law was expected to prompt the telecoms operators to ramp up investment and significantly improve the quality of calls and mobile services in a bid to avoid compensating their subscribers.
The firms have been previously cited by the CA for failure to meet the minimum 80 percent threshold on the quality of calls in over 30 counties.
The parameters that are used to determine quality of voice services are dropped calls, voice quality and call set up time while delays, internet accessibility and data transfer failure ratio determine the quality of internet services.
The CA uses metrics such as end-to-end delivery rates, completion rates and successful SMS ratio to determine the quality of messaging services.
Kenya seeks to join countries in the West where users of telecoms services are compensated in the form of a credit on their bill after network outages.
Service outages on Safaricom’s network surged nearly five-fold to an average of 19.5 minutes a week in the year to March 2024, new disclosures showed.
The network outages, blamed on electricity blackouts, meant that Safaricom’s customers could not make calls, send text messages, use data, or send money points.
Currently, the CA issues telecoms operators with spectrum licences on a first-come-first served basis, with the approval process taking 135 days.
Countries that use auctions to issue licences include Japan, The Netherlands, India, Vietnam, and Chile. In Africa, Ethiopia, Tanzania and South Africa have successfully issued licences via auctions.
Spectrum auctions are widely regarded as “best practice” in the assignment of wireless frequencies where demand exceeds availability.
In Kenya, telecoms operators are allowed to temporarily hold licences, a scenario that looks set to change if the country adopts licence auctions.
“On September 6 2024, Airtel Kenya has received confirmation from the regulator on extension of existing Network Facility Provider, Application Service Provider, Content Service Provider and Internationally Gateway Station and Service licence as well as its spectrum in 900 MHz, 1800 MHz and 2100 MHz that were due for renewal in January 2025 for a period of 24 months effective January 2025,” Airtel Africa Plc said in reference to its local subsidiary.
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