The cost of making a call across networks is set to drop significantly when the communications industry regulator reduces the cost an operator pays to terminate a call on another network.
The Communications Commission of Kenya said it intends to implement the next phase of the mobile termination rates glide path that started in 2010 on July 1.
This will see the rate that mobile phone companies charge each other to terminate calls outside their individual networks drop from the current Sh1.15 to 99 cents. The move is likely to trigger a drop in calling rates in the 13-year old industry.
“Further regulatory decisions on this matter will be communicated to the industry and other stakeholders in due course,” the CCK said.
But it is the three newest market entrants that will benefit the most since they will have a bigger margin, allowing them more room to set low rates for voice services to lure customers. The trio — Tangaza Pesa, Zioncell and Equity Bank’s subsidiary Finserve — were awarded mobile virtual network operator licences last month, allowing them to offer services similar to those offered by operators like Safaricom, yuMobile, Airtel Kenya and Telkom Kenya.
Tangaza has already announced it will be charging its subscribers Sh2 per minute to call across all networks, becoming the cheapest provider in the market. Tangaza chief executive officer Oscar Ikinu told said the rates would have been lower if the mobile termination rate was lower.
“For us, voice and data services are value addition to our mobile money customers, who remain our core business. We are looking at the possibility of charging our SMS at 50 cents in the future,” he said.
Zioncell and Finserve are yet to announce their rates, but it is expected that they will be below the current market rates.
Safaricom and Airtel charge a flat rate of Sh3 per minute for on-net calls while calls terminating in different networks are charged at Sh4 perminute. Telkom Kenya, on the other hand, charges Sh2 per minute for calls within its network and Sh3 across other networks. yuMobile’s subscribers pay Sh3 for both on-net and off-net calls.
The current low calling rates area product of the July 2010 reduction to Sh2.21, which saw voice tariffs fall from Sh8 per minute to Sh3 per minute, adding over 9 million new subscribers from 20.1 million in June 2010 to 31.3 million by December 2013.
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