Telecoms regulator moves to review mobile call rates

Communication Authority of Kenya headquarters, Nairobi. [Edward Kiplimo, Standard]

The Communication Authority of Kenya (CA) is set to review the rate at which mobile phone companies charge to connect calls (interconnection or termination rates) in a move that could spark another price war in the country’s telecommunications sector.

The regulator said in a notice the review, coming after 10 years, will be conducted by comparing and contrasting the cost of voice calls in Kenya and similar economies.

“On July 8, 2011, the authority issued Addendum No 2 to the Determination No 2 of 2010, revising the mobile and fixed termination rates, implying that implementation would run till June 30, 2015,” noted CA.

“Upon expiry of the glide path in 2015, the authority took a decision to observe the market and see how it reacts before proceeding to undertake another costing study.”

Telecommunications equipment. [Courtesy]

Mobile termination rates are a key cost component for pricing calls among service providers. It determines the margins that operators can put on voice calls within and outside their networks. 

In 2010, the CA cut mobile termination rates by more than 50 per cent, from Sh2.21 in July 2010 to Sh0.99 by July 2013. The move kicked off a price war between Safaricom and Airtel that saw voice call costs fall from a high of Sh12 per minute to an average of Sh3 per minute.

“Owing to the passage of time, changes in the markets as well as the macroeconomic environment, the authority now wishes to carry out a review of the telecommunications interconnection rates bench-marking methodology,” stated CA. The latest review comes even as service providers continue to record a slowed growth on voice compared to other revenue streams like data and mobile money.

According to Safaricom’s latest annual report, the telco registered Sh94.4 billion in voice revenue last year, a marginal drop from Sh95.7 billion in 2019 and Sh95.6 billion in 2018.