The cuts have curbed government tax proceeds from the telecom sector. With Kibaki's order, Kenya became the first country in Eastern and Southern Africa to intervene in the operators' battle to significantly reduce interconnection rates. Operators in other countries in the region are still waiting to see whether the Kenyan government intervention will have a ripple effect in the region.

The Communication Commission of Kenya (CCK) planned to further lower interconnection charges next month to make communication across networks cheaper, but Kibaki has directed the telecom sector regulator to shelve the plan.

Kenya's big operators, including Safaricom and Telkom Kenya, united last month in their resolve to block the CCK from effecting the planned further cut in interconnection rates. As in many other African countries, the cut in interconnection rates in Kenya 10 months ago ignited a price war that enabled people to call almost for free.

Interconnection refers to a commercial arrangement under which service providers connect their equipment, network and services to each other in order to allow their customers to access the networks of multiple service providers.

The push for further cuts in interconnection rates in Kenya was being championed by India's Bharti Airtel as it attempted to wrestle customers from Safaricom, the country's biggest mobile operator.