Kenyan mobile phone users continue to pay higher call charges than necessary because regulators have delayed implementing long-awaited reforms meant to lower interconnection fees, the World Bank has cautioned in a new report.
According to the latest Kenya Economic Update, the country’s mobile termination rates (MTRs) – the fees operators charge each other to connect calls – remain far above actual costs. The report says these outdated fees favour dominant players such as Safaricom while placing smaller operators at a competitive disadvantage.
The World Bank points out that the Communications Authority of Kenya has stalled the shift to cost-based MTRs, which could considerably cut down the cost of voice calls for millions of Kenyans. The current MTR framework expires on February 28, 2026, opening the door for fresh rate reviews that could finally push prices down.
“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.
Safaricom’s Opposition and Delayed Reductions
In March 2024, CA decreased MTR from Sh0.58 to Sh0.41 per minute following a long dispute involving Safaricom, Airtel Kenya and Telkom Kenya. The regulator had intended a steeper reduction to Sh0.12 per minute in 2022, but Safaricom fiercely opposed the cut, basing its opposition on the fact that such a reduction was inconsistent with its dominant market position in voice services.
Despite these incremental cuts, the World Bank says Kenya’s telecoms market still operates under “structurally outdated” systems. It highlights inefficiencies in spectrum allocation, infrastructure sharing and digital-market regulation, which collectively deepen the advantage enjoyed by larger incumbents like Safaricom and Airtel.
“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,” the report notes.
Infrastructure Sharing Still Weak, Favors Incumbents
The report flags Kenya’s infrastructure-sharing rules as another pain point. These guidelines, which have largely remained unchanged since 2010, permit the sharing of towers, fibre, and ducts; however, they are heavily dependent on informal negotiations rather than firm regulatory enforcement. The result is that larger operators can quietly delay or deny access to smaller companies, who then have to build duplicate towers instead of leasing existing infrastructure.
This inefficiency, the World Bank says, wastes capital that operators could use to expand coverage or lower prices.
International examples show the effectiveness of independent tower companies in reducing costs and improving network quality. Yet Kenya still lags behind.
“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.
MTRs Burden the Poorest Users Most
The high MTRs particularly hurt low-income households, who rely heavily on basic feature phones and traditional voice services.
“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.
Actual consumer call rates reflect this burden. Safaricom charges up to Sh4.87 per minute for in-network and off-network calls, while Airtel charges up to Sh4.30. Yet a 2022 CA cost study found that the true cost of connecting a call in Kenya is just Sh0.06 per minute, exposing a massive gap between pricing and cost.
Market Share Dynamics Show Why MTR Reform Matters
CA data for the quarter ending June 2025 shows Safaricom commanding a 63.4% market share, with 18.49 billion minutes out of the total 29.16 billion industry minutes. Only 7.9% of Safaricom’s calls ended on rival networks, meaning it pays minimal termination fees.
By contrast, Telkom pays heavily for interconnection because nearly half its calls terminate off-net: 17.3 million minutes on-net versus 17.4 million minutes off-net. Airtel recorded 3.1 billion outgoing off-net minutes compared to 7.4 billion on-net.
These imbalances explain why smaller players push for lower MTRs, while larger incumbents have resisted drastic reductions.
Kenya Falling Behind Regional Peers
The World Bank warns that Kenya’s delayed reforms have set it behind neighbouring markets. Tanzania’s MTR currently stands at Sh0.089 and will fall to Sh0.081 by 2027. Uganda also cut its rate sharply 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’s Interconnect Revenue Declines
Safaricom, long the biggest beneficiary of high MTRs, has seen its interconnect revenue fall by more than Sh2 billion since Kenya began gradually lowering termination rates from their peak of Sh2.21 per minute in 2010.
Regulators insist the goal is to promote competition and eventually lower retail call prices for consumers.
World Bank’s Recommendations
To foster a fairer and more competitive market, the World Bank recommends:
- Stronger infrastructure-sharing enforcement
- Transparent, competitive spectrum auctions
- Cost-based MTRs aligned with regional benchmarks
- Faster dispute-resolution processes
- A regulatory framework that reduces barriers for smaller operators
These changes, the report concludes, would make calls more affordable, attract new investment and help Kenya unlock the full potential of its rapidly growing digital economy.
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