Safaricom expects to lose 2 billion shillings in the financial year ending March 2023 after the Kenya Communications Authority (CA) cut mobile terminal (MTR) charges by 41.4%.
MTR is the fee that wireless service providers charge other operators to terminate voice calls on their network. For example, for calls to a Safaricom number from an Airtel number, Airtel will pay Safaricom a certain amount in addition to the call charges you pay Airtel to make calls and connect to Safaricom numbers.
CA reduced the MTR by 41.4% and, in August, had lowered its rate from Sh0.99 per minute to Sh0.58 per minute.
Since the amount has been reduced, Safaricom has been losing significant daily revenue.
With Safaricom hurt by these losses, its competitors are satisfied by the CA decision. Companies such as Airtel, Telkom and Equitel are saving money that they previously paid to Safaricom due to the newly reduced MTR.
Cuts to MTR were anticipated at around Sh0.12 per minute, but after sizable debate, the reductions were decided at Sh0.58 per minute.
The move has already generated reactions on social media, with some executives predicting Safaricom could suffer its first-ever loss.
