The Star (Nairobi)

Kenya: Row Over ICT Fund to Spill Over to 2014

LONG standing four -year dispute between Communications Commission of Kenya and mobile phone operators over contributions to the universal services fund is set to spill over into 2014.

The CCK required all companies in telecoms sector, except those in postals services, to comply with Kenya Communications (Amendment) Act of 2009 effective last July, the start of government's financial year.

The law requires them to contribute 0.5 per cent of their Sh10 million and above annual income towards bridging ICT access gaps especially in remote under-developed areas usually shunned by investors because of low returns.

Targeted telcos include mobile operators, internet solutions providers and broadcasters.

While the CCK maintains the USF's governance structure and management framework has been agreed upon, largest operator by market share and revenue, Safaricom, says its concerns are yet to be addressed.

Demands by Safaricom include two slots on the nine-member USF's advisory council be given to mobile operators and that funds from mobile phone industry should not be spent in other industries like postal services.

The council's membership was initially six when appointed in February 2013, but was expanded to nine last July to accommodate broadcasters and postal operators, leaving out mobile phone operators.

"The levels of accountability to the donors of the fund are not satisfactory," Safaricom's director for corporate affairs Nzioka Waita said. "We would like to (first) see how the fund will be apportioned in a way that is equivalent to what our industry is donating. As an example, we would not like funds from telcos used to subsidise postal services."

Safaricom also wants the CCK to first establish the universal ICT access gaps to inform setting of clear targets and objectives in mobile connectivity as well as data access and speed per capita.

CCK's director for consumer and public affairs Mutua Muthusi however said that the council is competent enough to address the concerns by operators.

"Members of the council are conversant with working of the sector," he said in an interview on December 6. "In fact, some companies have started bringing in cheques."

The regulator, as the administrator of the fund, is targeting Sh1.6 billion this financial year to next June, consisting of Sh1 billion it had set aside in 2009 and projected Sh600 million from its licencees.

Refusal by Safaricom could nonetheless deal the plan a blow as it's expected to contribute the lion's share based on its sterling performance unlike other telcos, majority of which are grossly struggling.

Safaricom's contributions alone could smash the forecast Sh600 million to Sh621.5 million going by its last fiscal year's earnings of Sh124.3 billion, and more than half the projection to Sh346 million by its Sh69.2 billion half-year to last September income.

The CCK has, however, estimated bridging the ICT access gaps will require Sh76 billion($877 million). This include Sh59.53 billion($687 million) for internet, Sh14.64 billion($169 million) for voice communications, Sh519.9 million($6 million) for postal services and Sh1.23 billion($15 million) for capacity building.

"You might not find everyone agreeing but from the submissions we have received, it is obvious that most companies are willing (to contribute)," CCK director general Francis Wangusi said in a telephone interview on December 2.

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