Kenya: Mobile Firms Attempt to Halt Further Reduction of Calling Rates

Telecoms

Mobile phone users in Kenya may cease to enjoy dramatic call tariff cuts if intense lobbying by Safaricom and Telkom Kenya for the government to intervene and put a break to any further price reductions bear fruit. The pair has succeeded in having the Prime Minister's office form a taskforce to study whether Kenya's mobile phone pricing is sustainable and what would be the future.

Operators seem to have won one soul - the permanent secretary in the Ministry of Information and Communications, Dr Bitange Ndemo who says that low rates will hurt the economy. "Already some operators have lost revenue; we are taking this matter seriously. We need to talk sense on this pricing issue," said Ndemo on Wednesday.

He said only 40 per cent of the country's landmass is covered and it will be difficult to reach the rest of the country with the ongoing price war. "We can't sit and wait for companies to close," he added, as Safaricom chief executive officer Bob Collymore echoed, "We want conducive business environment for the telecoms industry. Low calling rates means we will have to go slow on our expansion plans."

Speaking during a press briefing on the upcoming Connected Kenya Summit, Collymore proposed that the government must ensure healthy pricing in the industry, and attach strict rollout and coverage requirements to mobile licences. Others are effectively manage spectrum allocation and pricing by allocating it where it is needed and apply the principle of use or lose as well as try to moderate levels of taxation.

If operators succeed to woo the government to put price floors, Kenya will be joining its neighbour, Uganda. The country recently issued guidelines that will become effective March 15. They will empower Uganda Communications Commission (UCC) to establish minimum rates below which players will not be allowed to offer services, even under promotions. The guidelines are intended to curb anti-competitive practices, encourage new investments (including new players), enhance tariff transparency and protect consumers.

The new rules target aggressive companies like Warid Telecom that have shaken up the sector with unprecedented tariff cuts and highly popular promotions like Pakalast, Kawa, Pepeya and Berako.