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New frequency guidelines rattle telecom operators

By Frankline Sunday | November 30th 2020

The telecoms regulator says only Treasury can make the decision on reviewing spectrum fees. [File, Standard]

Safaricom has clashed with the industry regulator over a proposed law touching on the distribution of frequencies. 

This follows the release of the Frequency Spectrum Management Guidelines 2020 by the regulator to guide the State’s distribution of the resource.

Some of the proposals by the Communications Authority of Kenya (CA) include the setting aside spectrum for use by the national and county governments and enhanced penalties for its interference and underutilisation by service providers.

Of particular concern by Safaricom and other service providers is the proposal to have some operators exempted from paying billions of shillings in spectrum fees.

“Licensees will be required to pay requisite frequency fees prescribed by the Authority as and when they fall due,” states the proposal in part.

“Failure to which will result in penalties or other actions as stipulated in the authorisation instrument (the license), the Act and the regulations. However, this will not be applicable to licensees who have been exempted from payment of frequency fees.”

In a rejoinder, Safaricom has rejected the proposal, arguing that all service providers be treated equally and pay uniform spectrum fees. “In the spirit of fair treatment, all licensees should be treated equally in so far as payment of license fees is concerned,” said the telco in its submissions to the regulations.

“The authority should reinforce this guideline to seal off any loopholes relied upon in the past by some licensees to evade paying the fees.”

Spectrum fees are the monies paid out by licensees to occupy specific radio frequencies on which they channel their services.

In the 2018/2019 financial year, Sh7.6 billion out of the authority’s Sh8.9 billion total revenues came from licence fees from service providers. The CA has come under the spotlight over its administration of spectrum fees. This has been at the heart of bitter boardroom wrangles.

In 2015, two years before Airtel Kenya’s frequency licence was due to expire, CA issued the mobile telephone operator with a Sh2.3 billion demand letter as a condition for a new 10-year lease.

Airtel protested the fees, arguing that the 2014 acquisition of Essar’s YU Mobile extended the telco’s operating license to 2024, which the regulator had corroborated in a letter granted during the acquisition.

Treasury opposed the waiver, demanding collection of the Sh2.3 billion since CA did not have powers to grant a licence waiver of that magnitude. The case dragged in court for three years and split CA board, with one faction seeking to collect the licence fees. The final court ruling was made in December 2017 in favour of Airtel Kenya.

In 2017, CA board chair Ngene Gituku was hard-pressed to explain how they granted Jamii Telecom a 4G licence for Sh100,000 while other service providers were paying Sh2 billion.

CA then said the licence to Jamii Telecom was on a trial basis. In 2019, an amendment made to the Kenya Information and Communication Act allowed local operators to pay license fees of up to Sh1 billion in instalments.

Other service providers such as Qualcomm have rooted for spectrum fees waiver to reduce the cost of capital investments. CA said only Treasury can review spectrum fees.

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