Kenya: Telkom And Airtel Owe Safaricom US$13.9 Million

Telkom and Airtel owe Safaricom 13.9 million USD for using its interconnection fees from cross-network calls and co-location facilities. However, the operator has made provision for the loss of funds caused by the debt owed to them by the two rival telcos.

As reported by BMA sources, "delays in collecting dues, on a conservative basis raised the firm's estimated loss". Chief Finance Officer for Safaricom Dilip Pal said: "the accumulation of losses from Telkom Kenya, and overall co-location and interconnection combined is around 13.9 million USD, that being the major chunk of the expected loss increase seen compared to last year."

Before the unsuccessful merger of its rivals, Safaricom revealed in a letter to the Communications Authority of Kenya (CA) that Telkom and Airtel owed it 8.4 million USD and 3.6 million USD, respectively, for interconnection, co-location, and fibre services it provided to them.

Part of the debt derived from interconnection fees, for which Safaricom forecasts a credit loss of $6.15 million in its annual report. The company will bear the additional costs from co-location, known as renting outstations to other operators. According to Telkom CEO Mugo Kibati," Telkom and Safaricom have agreed on a payment schedule that the organization is following and keeping up to date."

Safaricom emphasized the problem of legacy debts again after the failed attempt to merge Telkom and Airtel. The company's then-acting CEO Michael Joseph wrote to the Kenyan Communications Authority requesting $11.1 million before approving the deal.

In March 2020, Safaricom earned 45.4 million USD in interconnection fees, up from 42.6 million USD the previous year. According to the telco's annual report, it made 16.6 million USD in co-location fees in the same time, up from 15.7 million USD in 2019. It's unclear whether Safaricom intends to sue its competitors in court or through the Communication Authority (CA).

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