Treasury to pocket Sh7.5 billion in 4G licence fees

Mobile operators have until July to pay the Sh2.5 billion licence fee for the fourth generation mobile telecommunications technology (4G). The Communications Authority of Kenya (CA)) said the grace period for trials extended to the three operators will expire next month and they will be required to pay the licence fees to continue using the frequencies.

“We gave out the 4G frequencies for pilot to all the three operators and the concession will be over by the end of July. We expect the operators to pay $25 million after that,” CA Director General Francis Wangusi said.

Consumers are expected to enjoy better services on 4G networks, which make it faster to surf the web on mobile, tablets and laptops. It is suited for services, which demand more capacity like video streaming, heavy downloading, and video calling. Mr Wangusi has ruled out the possibility of reducing the licence fees for the small operators who have previously raised concerns that the amounts will be too high.

This means that Treasury will pocket Sh7.5 billion, a fee Mr Wangusi said is still a bargain if compared to other markets. “We will only give the frequency to the three operators because they have GSM capability. They will be allowed to share with the smaller operators for diversity,” Mr Wangusi said.

This means that only Safaricom, Orange and Airtel will be given licences. Wangusi said the licence fee would be for 10 years before they come up for renewal. Wangusi said the three operators would be allowed to share their allocation with small players for diversity.

Safaricom was the first operator to start trials of its 4G network. It has rolled out the services in major estates in Nairobi and Mombasa. The communication regulator said it had also identified 200 sub locations around the country that will be given a smart subsidy under the Universal Service Fund (USF).

Hard to reach

“Operators will be invited to place their bids to see what they can offer. They can also come up with their suggestions,” Wangusi said. He said the authority was open to proposals such as waiver of spectrum fees for the operators that will be willing to invest in closing the gaps in the areas without mobile coverage.

Wangusi said the authority has set aside Sh500 million to cover 1000 schools with broadband connectivity. He said the authority has collected more than Sh3.94 billion from the operators under USF even as he hinted at the possibility of reviewing the fund from 0.5 per cent to 1 per cent.

Telecoms, postal and courier service operators pay an equivalent of 0.5 per cent of their annual turnover while CA contributes 25 per cent of its surplus revenue to the fund. The USF is used to invest in areas that do not make business sense for mobile operators or hard to reach.

A recent Government report showed 164 sub-locations in the North Rift and North Eastern regions are not covered by Kenya’s three mobile phone operators, more than 17 years after Kenya issued its first mobile telecommunication licence. Another 414 sub-locations have less than 50 per cent population coverage.

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