Safaricom takes Airtel to court over Sh0.5 billion debt

Telecoms

Leading mobile network operator Safaricom has moved to court seeking to recover close to half a billion shillings from its rivals for non-payment of termination fees since October together with penalties.

Safaricom is demanding close to half a billion shillings from Airtel and about Sh150 million from Essar for non-payment of termination fees — the amount of money an operator pays rivals if its subscribers call another network — since October.

It’s also seeking that the operators pay it interests and collection fees for delayed payment, arguing that the dues are hurting its cash flow. The interest is pegged on the average base rate that currently stands at 20.34 per cent and Safaricom hopes the penalty will act as a deterrent for delayed payments. 

“What Safaricom is telling its rivals is that they can hold on to its debt as long they wish, but at a cost and the cost are the penalties,” said a lawyer who is familiar with the suit and wished not to be named.

For a start, Safaricom is demanding Sh4 million from Airtel for the late payment of termination charges covering July and August, which stood at Sh173 million.

Safaricom through Havi and Company Advocates is accusing Airtel of breaching the July 2002 interconnection agreement for the provision of telecommunications services to their respective customers. Airtel has not responded to the suit.

The agreement states that operators must prepare a billing statement and tax invoice for interconnection charges and forward the same to the other party within two weeks of every month.

The termination rate—which currently stands at Sh2.21 a minute—is emerging as a big issue in Kenya’s mobile telephony market and has split the board of the telecommunication regulator on whether it should be reduced or not.

Francis Wangusi, the acting CCK director, said last Wednesday that the termination rate will drop to Sh1.44 per minute in July from the current Sh2.21, but Information permanent secretary Bitange Ndemo, also a director, is opposed to it.