Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
Telcos flag county taxes, illegal internet as threats
Counties in the Coast and Mount Kenya regions have emerged as hotspots for illegal internet service providers, a new investigation by the sector regulator reveals.
Telecommunication companies in Kenya have flagged high levies by county governments and illegal internet service providers as the biggest threat to their operations, turning the spotlight on the State amid hurting revenues.
A report by the Communications Authority of Kenya (CA) shows that counties are charging upwards of Sh200,000 per year to allow Mobile Network Operators (MNOs) to set up a single communication mast, woes that have been compounded by revenue leaks to illegal players keen to tap the market in the fast-growing demand for internet.
Demand for internet has been on a steady rise over the years amid the increased popularity of remote working, e-commerce, online learning, and streaming of television programmes.
Most of the MNOs have felt the hit on their revenues given that they have not managed to deepen earnings from other streams like mobile money. This excludes Safaricom, whose steady profits are largely driven by M-Pesa.
“Licensed operators cited the high cost of levies being charged by the County governments for erecting masts, up to (up to Sh200,000 annually to be paid to counties), and a fixed charge per metre of fiber laid as contributing to increasing high costs of doing business,” CA says in the latest report.
Telcos are the latest industry to decry the steep and numerous levies that counties charge, unnecessarily increasing their operational costs which in turn affects their bottom line and retail prices of products. The firms are also required to pay license fees to CA and other regulatory agencies.
CA requires Safaricom, Airtel, and other MNOs to set up a specific number of mobile phone masts in sub-locations, meaning that the higher the target the more they pay in levies to counties.
For example, CA directed Safaricom to install 550 such masts and Airtel 102, translating to Sh110 million and Sh20.4 million respectively in levies alone.
The steep levies come even as the companies grapple with a proliferation of illegal players buying internet from the licensed players and in turn reselling it to customers at lower prices. The vice is prevalent in informal settings and last-mile areas where the licensed players are struggling to penetrate.
