The Communications Authority of Kenya (CA) has now slashed the rate charged by mobile phone operators to each other for interconnecting customers by 87.7 percent or 0.87 Kenyan Shillings, an indicator of lesser call tariffs.
The Communications Authority of Kenya (CA) which is the telecommunications regulator in Kenya slashed the charges which are more commonly known as Mobile Termination Rates (MTRs) from 0.99 Kenyan Shillings to 0.12 Kenyan Shillings. The reduction is aimed at accurately reflecting the changes in technology that have resulted in mobile telephoning becoming much more efficient.
It however remains unclear whether or not telecommunications giants like Safaricom, Airtel Kenya and Telkom Kenya will carry out a corresponding reduction in the call tariffs due to the new reduced charges.
It is however not mandatory for the telecommunications companies to reduce the consumer calling tariffs to match or reflect the 0.87 Kenyan Shilling drop in the termination charge.
The Director-General of the Communications Authority of Kenya (CA); Ezra Chiloba made it known through a press statement that, “Consumers will enjoy lower calling rates following the review.”
The Director-General added that, “The review was founded on the recognition that higher MTRs mean higher calling rates for consumers.”
According to industry data the rate, has been steadily reducing from a high point of 4.42 Kenyan Shillings in 2011 to the now revised 0.99 Kenyan Shillings which had been in place for as far back as 2015. This marked a pause of over five (5) years during which serious lobbying was being carried out by a number of major telecommunications companies in the country.
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It is believers that the slash could lead to a price war if mobile phone operators in Kenya decide to reduce their call tariffs. Especially when you put into consideration the fact that the previous slash which in occurred in 2010 from 4.42 Kenyan Shillings to 2.21 Kenyan Shillings resulted in a price war between telecommunications operators in Kenya.
The Communications Authority of Kenya (CA) made it known that the reduction will have a positive effect on both the operators and consumers. It added that the charge review will also reduce the need for telecommunications consumers to have multiple SIM cards as the charges incurred across the numerous networks eventually reduce.
In the words of the Director-General of the Communications Authority of Kenya (CA); Ezra Chiloba, “At the retail level, consumers will now enjoy access to a variety of affordable services across networks and at the wholesale level operators will have more price flexibility when developing innovative and affordable products.”
As it stands the smaller telecommunications companies, are more likely to pay more in mobile termination rates due to the fact that users are more likely to spend more time on other networks as opposed to its own network.
The drop in termination charges could also benefit users who have been struggling with reductions in their spending power as a result of the negative effects brought on by the still ongoing coronavirus pandemic.
In recent times mobile phone operators have changed the code to of calls to other networks in a bid to reflect the corresponding change in excise taxes.
Airtel Kenya for instance currently charges 2.78 Kenyan Shillings per minute to make calls to other telecommunications networks. Safaricom charges 4.87 Kenyan Shillings per minute for calls to other networks while Telkom charges 4.30 Kenyan Shillings to call other networks.
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In 2012 the Mobile Termination Rate was slashed to 1.44 Kenyan Shillings per minute from 2.21 Kenyan Shillings and then to 0.99 Kenyan Shillings in 2015.
President Mwai Kibaki who was the President of Kenya at the time had in 2011 put a stop to any further reductions after the telecommunications operators stated that their businesses were under threat from drops in their revenues.
According to analysts it is expected that operators like Airtel Kenya and Telkom Kenya will be the one to benefit the most from the move alongside the users.
For Safaricom which is the larger operator it is likely that its revenues will drop. However the impact of said drop will be less for its earnings.
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Industry data provided by the Communications Authority of Kenya (CA) revealed that in the three (3) months leading to December 2021 mobile subscribers were at 61.41 million an indication of the significant growth opportunities available for telecommunications service providers.
In December of 2021 Safaricom’s share of the voice market in Kenya increased to its highest level in three (3) years further asserting the dominance of the telecommunications company.
The data from the Communications Authority of Kenya (CA) revealed that Safaricom’s share of the voice market increased to 69.2 percent in the three (3) months up to December of 2021 from 64.7 percent in September of the same year.
The Communications Authority of Kenya (CA) also ascribed the growth to Safaricom’s mobile data promotion offers and calls promotion offers. The telecommunications company (Safaricom)’s increasing market share in the voice market is coming at a time when its competitors Airtel Kenya and Telkom Kenya have been faced with difficulties.
The Communications Authority of Kenya (CA) stated in an earlier report that, “The increase is mainly attributed to Safaricom@20 Promotion that aimed at availing new subscribers of attractive voice and data bundle offers while offering similar incentives to their existing customers.”
For Airtel Kenya its market share of the voice market reduced to 28.5 percent in the period under review from the 32.1 percent that was the case in September of 2021. Telkom Kenya’s market share in the voice market, dropped to 2.2 percent from three (3) percent.
June of 2018 was the last time Safaricom’s dominance in the voice market was higher than 69.2 percent. There it hit 70 percent.
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