A decision by over 21 counties to impose an annual license fee on telecommunication masts might have just exacerbated an existing feud involving the American Towers Corporation (ATC) and the national government.

ATC is seeking the Senate’s intervention on double taxation and compel State-owned Telkom Kenya to settle Sh4 billion debt owed, a twin problem that has impacted its operations as some masts now remain idle.

When ATC completed the acquisition of 715 towers from State-owned Telkom Kenya in 2018, the license fees were only being collected by the national government through Communication Authority of Kenya (CA).

But over those five years, the devolved units have gradually introduced annual license fees of between Sh50,000 and Sh270,000 per mast to shore up self-revenue and reduce dependence on the national treasury. “These taxes threaten to disrupt Kenya’s major government agenda of universal access, competitive knowledge-based economies, and effective government services,” ATC Kenya chief executive, Thomas Sonesson, said in the documents tabled before the Senate Committee on Information Communication and Technology.

Four counties, including Kajiado, Meru, Laikipia, and Mombasa have already slapped ATC with default notice over license fees for its over 3,600 masts across the country. Some have already hired debt collectors to recover the billed amounts.

But with Telkom Kenya unable to pay the Sh4 billion debt, ATC has equally left struggling to meet most of its financial obligations including the levies, maintenance and operations costs.

The government currently has a 40 per cent stake in Telkom though the actual shareholding remains contentious due to the alleged Sh6.1 billion controversial full-acquisition from Helios by the State in 2022. The matter is still under investigation.

Telkom’s debt relates to the costs of electricity in the masts borne by ATC since it started operating the leased masts in 2018. ATC has now switched off half of its base masts to prevent further piling of the debt, leading to the recent loss of the Telkom network.

“Due to the current macro-economic challenges within the environment in which we operate, it was not sustainable for ATC to continue rendering Telkom Kenya services without the expectation of payment,” added Sonesson.Telkom Kenya has however illegally reconnected the power supply and in retaliation, blocked ATC from accessing the sites where the masts are located.

Service interruption

This has also affected ATC’s customers, including Mobile Network Operators (MNOs), Internet Service Providers (ISPs) and broadcasters who collocate on the same sites.

According to ATC, its eight clients comprising Safaricom, Airtel Money, Liquid Telecommunication Ltd, Jamii Telkom, KBC, and Mediamax have all experienced service interruption since mid-May 2023 due to the retaliatory action.

Telkom Kenya is expected to appear before the Senate committee on September 9 to respond to the queries over the outstanding debt and the unlawful blocking of access to the sites which contravenes the Master Site License Agreement.

Telkom has been facing huge financial strain since 2021, with the government now weighing options to get new investors to take over the huge debts and resuscitate the telco.

Ezra Chiloba, CA Director General disclosed last March that the authority will not renew Telkom’s licence next year unless it settles the Sh9.4 billion debts owed to both ATC and Safaricom.