Corporate News
ICT secretary Fred Matiang’i (left) with Communications Authority of
Kenya director-general Francis Wangusi in November last year. PHOTO |
FILE
In Summary
- Mobile operators query directive for sector to remit nearly Sh2bn to the Universal Service Advisory Council (USAC) – an agency formed by the government to manage the funds.
- The firms have raised concerns over a lack of representation on the Universal Service Fund (USF), financial governance and accountability of the fund to the contributors.
- The USF levy became effective last July and is managed by an independent committee comprising of appointees of the ICT secretary.
A standoff is looming between telcos and the
regulatory authority over a requirement for the firms to remit billions
of shillings to the government for installing communication services in
marginalised areas.
Safaricom and Airtel have questioned the requirement to
remit nearly Sh2 billion to the Universal Service Advisory Council
(USAC) – an agency formed by the government to manage the funds.
ICT secretary Fred Matiang’i has given the telcos
up to the end of this month to pay up the amount equivalent to 0.5 per
cent of their annual turnover, but the telcos have raised concerns over a
lack of representation on the Universal Service Fund (USF), financial
governance and accountability of the fund to the contributors.
“Whereas we are very keen to support the
establishment of a successful universal service fund, it runs the risk
of becoming just another tax that is levied on licensees of the CA
(Communications Authority of Kenya), particularly due to the manner in
which those expected to contribute to the fund have been side-lined from
its formation,” said Safaricom corporate affairs director Nzioka Waita.
Safaricom’s position was echoed by Airtel which also queried the governance structure for administration of the fund.
“We had requested the Communications Authority to
issue guidelines on the selection criteria for the projects that would
be funded from the USF and the basis for the allocation of funds in
order to ensure transparency and achievement of objectives to the
benefit of consumers in the targeted areas,” said Airtel Kenya CEO Adil
El Youssefi.
Speaking at a press conference last week, Mr
Matiang’i said firms that do not submit the levy by the end of this
month would be penalised.
Safaricom, Kenya’s largest telco, is expected to
pay up to Sh733 million based on its annual turnover of Sh144.7 billion
last year.
Other firms expected to pay up the USF levy include media houses such as the Nation Media Group, Standard Group, all Internet service providers and the Postal Corporation of Kenya.
“The USF levy became effective last July and the
operators are required to have submitted their contribution for the year
ending, we are asking those who have not done so to contribute by
August 30 or risk penalties,” said Dr Matiang’i last week.
In a letter dated July 31 addressed to the ICT
secretary, the telecom operators through their lobby group, Kenya
Telecommunication Network Operators, are seeking clarity around the
objectives of the fund and its governance.
The firms say the CA last July agreed to expand the
membership of the USAC from six to nine to accommodate representatives
from the telcos, broadcasting and Postal Corporation, but failed to do
so when it named the board.
“We note that the authority has proceeded to issue
invoices to our members in respect of the USF levy for the period from
July 1, 2013. We are concerned about making payments into the USF prior
to having our above pertinent issues addressed,” part of the letter by
the lobby group read.
“We, therefore, request your intervention in
ensuring that our above issues are addressed prior to the implementation
of the USF,” it added.
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