A new government tax on mobile phone operators in Kenya has many companies believing the move will eat into their earnings in order to support the bolstering of telecommunications services in areas of the country previously considered unviable.
The government had suspended the levy, dubbed Universal Service Fund (USF), last year after the operators agreed to rollout services such as connecting rural Kenya to the Internet.
The Information ministry says the operators reneged on the agreement, prompting the government through the Communication Commission of Kenya (CCK) to start deducting the levy from its licensees including broadcasters and courier firms.
This is set to hurt the earnings of mobile phone operators most, at a time when the halving of call costs because of a price war has not helped jerk the average revenue per user (ARPU) — signaling reduced sales and profitability.
But on Tuesday the government insisted that the levy is there to stay even as the operators, led by Airtel, questioned which projects the government wanted to implement with the money adding that the levy was an additional tax.
“We hope to see the results of the Universal Access Gaps study whose results are intended to inform the implementation of the USF; how much and where the funds are to be applied,” said Rene Meza, the managing director of Airtel.
By Staff
