Safaricom is bracing for a fresh squeeze on earnings after the Communications Authority of Kenya introduced a phased reduction in mobile termination rates, the fees operators pay one another for cross-network calls.
The regulator has mapped out a four-year glide path that will lower the mobile termination rate from Sh0.41 per minute to Sh0.37 with effect from Sunday, before tapering further to Sh0.30 by March 2029. In total, that represents a cumulative cut of 26.8 per cent.
In practice, when a subscriber on one network calls a user on another, the originating operator pays a termination charge to the receiving network. Given Safaricom’s commanding 61 per cent market share, it collects more in termination fees than it pays out. A reduction in the rate therefore trims its net interconnection income.
Under the revised schedule, the rate will fall to Sh0.37 per minute for the year ending February 2027, then to Sh0.35 by February 2028, Sh0.33 by February 2029, and finally to Sh0.30 from March 2029, ahead of a fresh review.
Interconnection income accounts for roughly one per cent of Safaricom’s total revenue, a share that nonetheless exceeds roaming earnings. In the year to March 2025, the telco generated Sh4.7 billion from interconnection fees paid by rivals Airtel Kenya and Telkom Kenya, down from Sh5 billion the previous year. Its interconnection and roaming expenses also declined, easing from Sh7.3 billion to Sh6.5 billion.
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The previous reduction in rates from Sh0.58 to Sh0.41 per minute, the sharpest cut in more than a decade, had already dented revenues. The latest move follows concerns raised by the World Bank, which argued that Kenya’s termination rates were not sufficiently cost-oriented and tended to favour dominant players by creating “club effects” that disadvantaged smaller networks.
This marks the fifth review of termination rates since 2007, part of a long-running effort by the regulator to foster competition and relieve smaller operators of heavy cross-network charges. Earlier attempts to push rates as low as Sh0.12 per minute met stiff resistance from Safaricom, prompting the regulator to opt for gradual reductions instead.
