World Bank flags Kenya's unfair mobile termination fees that hurt smaller operators
According to the report, current mobile termination rates remain far above actual costs, favouring dominant firms like Safaricom and placing smaller operators at a disadvantage.
Kenya’s mobile phone users are paying more than necessary for calls, as regulators delay reforms aimed at lowering the fees operators charge each other for connecting calls, a new World Bank report warns.
According to the report, current mobile termination rates remain far above actual costs, favouring dominant firms like Safaricom and placing smaller operators at a disadvantage.
More To Read
- Kenyan households drowning in debt despite financial inclusion gains
- Kenyan men handled majority of mobile money deals in 2024 with Sh5.3 trillion in transactions - CBK report
- Business, emergency needs top reasons for loans in Sub-Saharan Africa, study finds
- CBK proposes cap on mobile money fees to ease transfer costs
- Mobile money use in Kenya hits Sh724.8 billion monthly in 2024
- Kenya leads in mobile money borrowing as Sub-Saharan Africa leans on informal loans - World Bank Report
The international financier said the Communications Authority of Kenya (CA) has postponed adopting cost-based mobile termination rates (MTRs), keeping charges high and preventing consumers from accessing cheaper calls. The current rates are set to expire on February 28, 2026, opening a window for potential reductions.
“Kenya has yet to fully implement cost-oriented or pro-competitive mobile termination rates. These create club effects that favour larger operators, because networks with fewer customers must pay MTRs on a higher share of calls their customers make,” the World Bank said in its latest Kenya Economic Update.
CA reduced the MTR from Sh0.58 to Sh0.41 per minute effective March 1, 2024, after a protracted dispute involving Safaricom, Airtel Kenya and Telkom Kenya. The regulator had originally planned to lower the rate to Sh0.12 per minute by January 1, 2022, but Safaricom opposed the move, citing its leading market share in voice services.
The World Bank highlighted Kenya’s telecommunications sector as one of the country’s fastest-growing but structurally outdated industries. The report points to gaps in infrastructure sharing, spectrum allocation and digital-market oversight, which increasingly benefit large incumbents like Safaricom and Airtel, raising costs for smaller operators and consumers while discouraging new investment.
“By contrast, switching from administrative allocation to competitive auctions when demand exceeds supply could ensure that spectrum is allocated to the players able to use it most productively and valuably,” reads the report.
It also notes that infrastructure-sharing rules have barely changed since 2010. Operators can share towers, ducts and fibre, but arrangements rely on informal negotiations with little regulatory pressure. Larger firms can quietly delay or refuse access, forcing smaller operators to build duplicate towers rather than use existing infrastructure. This inefficiency diverts resources from expanding affordable coverage.
International examples, including Nigeria, Colombia and Myanmar, show that independent tower companies lower costs and improve service quality.
“Kenya’s telco towers are still controlled mainly by the giant operators and have never fully delivered the same competitive or cost benefits,” the World Bank said.
Smaller operators remain disadvantaged by MTRs that are well above cost and higher than in peer countries such as Tanzania and Ghana.
“Mobile termination rates for voice and SMS are important for the poorest – half of the bottom 40 per cent of the population only have a basic phone and daily use of phone calls is over four times that of the Internet,” the report added.
Safaricom charges up to Sh4.87 per minute for calls both on its network and to rival telcos, while Airtel tops at Sh4.3 per minute. Yet a 2022 CA study found the actual cost of MTR in Kenya is Sh0.06 per minute.
Data from CA for the quarter ended June 2025 shows Safaricom with a 63.4 per cent market share, logging 18.49 billion minutes out of 29.16 billion in the industry, with only 7.9 per cent of its calls going to rival networks. Telkom, with more off-net calls, pays heavily in termination fees: its on-net calls were 17.3 million minutes, and off-net 17.4 million minutes. Airtel recorded 3.1 billion outgoing off-net minutes versus 7.4 billion in-house minutes.
The World Bank recommends stronger infrastructure-sharing rules, transparent spectrum auctions, fairer MTRs and faster dispute resolution to reduce costs for consumers and boost competition.
The report also cautions that Kenya lags behind regional peers. Tanzania’s MTR of Sh0.089 per minute is set to fall to Sh0.081 by 2027, and Uganda slashed its rate from Sh1.64 to Sh0.95 last year.
“The delay in drastic MTR cuts has left Kenya behind other countries in the region, slowing affordability and market efficiency,” the World Bank said.
Safaricom, the net beneficiary of high MTRs due to its dominant position, has seen annual revenue from interconnect fees drop by more than Sh2 billion since Kenya began lowering rates from highs of Sh2.21 per minute in 2010. The regulator maintains that its policy decisions aim to reduce call rates for consumers by promoting competition.
Top Stories Today
