Kenya’s mobile phone market is facing high costs for consumers and an uneven playing field for smaller operators, as the country continues to delay reforms on fees charged between networks, a new World Bank report warns.
The findings show that mobile termination rates (MTRs) remain far above the actual cost of connecting calls, giving a clear advantage to dominant firms such as Safaricom while leaving smaller telcos struggling to compete.
The report criticizes the Communications Authority of Kenya (CA) for postponing the shift to cost-based MTRs, which could bring rates closer to the real expense of connecting calls.
The current rates are scheduled to end on February 28, 2026, creating an opportunity to introduce fairer fees that would benefit both consumers and smaller operators.
“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 stated in its Kenya Economic Update.
CA previously cut the MTR from Sh0.58 to Sh0.41 per minute on March 1, 2024, after prolonged negotiations between Safaricom, Airtel Kenya, and Telkom Kenya. Earlier plans to reduce the rate to Sh0.12 per minute by January 2022 were blocked by Safaricom, which cited its dominant market share in voice services.
The World Bank points out structural challenges in Kenya’s telecoms industry. While the sector is growing rapidly, outdated rules on spectrum allocation, infrastructure sharing, and market oversight continue to favour large incumbents, raising costs for smaller operators and consumers and slowing investment in new networks.
“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 explains.
Infrastructure-sharing regulations, largely unchanged since 2010, depend on informal agreements between operators. Larger firms can delay or deny access to towers, ducts, and fibre, forcing smaller players to invest in duplicating infrastructure.
Such inefficiency slows the rollout of affordable coverage, while other countries like Nigeria, Colombia, and Myanmar have successfully used independent tower companies to reduce 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 report said.
High MTRs hit poorer households hardest. Half of the bottom 40 per cent of Kenyans own only basic phones, and these users make phone calls four times more often than they access the internet. Safaricom charges up to Sh4.87 per minute, while Airtel charges up to Sh4.3 per minute.
A 2022 study by CA, however, found the true cost of termination is just Sh0.06 per minute.
Data for the quarter ending June 2025 shows Safaricom with a 63.4 per cent market share, handling 18.49 billion minutes out of 29.16 billion in total, with only 7.9 per cent of its calls going to rival networks.
Telkom, whose users make more off-network calls, pays heavier termination fees, while Airtel also bears higher costs for off-net calls compared to on-net traffic.
The World Bank recommends stronger infrastructure-sharing rules, transparent spectrum auctions, fairer MTRs, and faster resolution of disputes to reduce costs and encourage competition.
Regional comparisons show Kenya is lagging. Tanzania’s MTR of Sh0.089 per minute is expected to drop further to Sh0.081 by 2027, while Uganda lowered 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 report said.
Safaricom, which benefits most from high MTRs, has lost more than Sh2 billion in annual interconnect revenue since Kenya started lowering rates from peaks of Sh2.21 per minute in 2010. The regulator maintains that its policies aim to encourage competition and reduce call charges for consumers.
