Kenya not likely to scrap airtime tax

Mobile phone companies in Kenya will have to intensify calls for the scrapping of tax on airtime after the finance minister shrugged off requests to lower the 26 percent duty.

During its annual results presentation, Safaricom called on the government to reduce the duty in order to lower the cost of calls. The request to reduce the duty has been a constant call by Safaricom, Zain, Orange and Yu.

"The duty paid is important to treasury; if the government scraps the duty, the books will not balance," said Uhuru Kenyatta, the minister in charge of finance.

Instead of addressing the prospect of lowering the tax, Kenyatta chose to dwell on the advantages that submarine fiber-optic cables will provide for the mobile phone services sector.

"We expect arrival of the TEAMS, SEACOM and EASSY submarine cables to reduce cost of communication and solve the problem of insufficient bandwidth," the minister said.

Safaricom announced 15 billion Kenya shillings (US$193 million) pretax profit for the year ending March 2009. At the same time, the company was not affected by the price war with Zain, since it signed up 3.1 million more subscribers to its network, bringing the total to 13.36 million. Its market share stands at 79 percent.