27 November 2012

Kenya: CCK Slashes Call Rates Between Mobile Networks

The Communications Commission of Kenya has slashed the rates mobile phone operators charge each other for calls outside their networks.

CCK cut the mobile termination rate, from Sh2.21 to Sh1.44 per minute effective July 2012. But CCK said it does not see this translating into lower call rates. "It does not mean that you will directly feel the impact," said CCK director general Francis Wangusi. By lowering the rates, CCK said it expects competition in the mobile telecommunication industry to intensify translating into better quality of services and "possibly reduced call rates".

The reduction in call rates, however, depend on mobile operators themselves since CCK does not set a ceiling for mobile tariffs. "The law does not allow us to set floor prices.It is up to them (operators)," said Wangusi. CCK, however, cautioned operators against using the rate to undercut each other.

Safaricom, the largest operator and the one likely to be most affected by the decision, said it was still awaiting the "full determination" of the rates from the CCK before commenting on the same. Safaricom and Orange had initially opposed any further reduction in the MTR on grounds that the decision will lead to reduced revenues for operators and the government as wellas lead to reduced investments in the sector.

But CCK said a study that was undertaken to review the possible impact of MTR cuts had found that contrary to the allegation of some players, retail price competition has not had any adverse impact on the economy.

"In particular, the study established that competition had no adverse effects on the quontum or stability of tax revenue, employment, inflation, investments, perfomance of telecoms shares in the stock market, stability of the Nairobi Stock Exchange, business process outsourcing and access and affordability of communication services," CCK said.

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