Kenyan telecommunications operator Safaricom has reluctantly accepted the decision by the industry regulator, the Communication Commission of Kenya (CCK), to reduce mobile tariffs within the country. This is according Michael Joseph, CEO of Safaricom.
The CCK recently issued a ruling that capped mobile interconnection fees at $0.43 per minute. The regulation was put in place to protect Kenyan mobile subscribers from high rates imposed by mobile operators.
Joseph says the CCK's decision was premature, as market forces would have brought down the tariffs anyway.
Safaricom, in conjunction with Vodacom Tanzania and MTN Uganda, introduced a single East African mobile network in February. This allows subscribers on the three networks to make calls at local rates when travelling across the border, as well as receive free incoming calls to reduce the costs.
Joseph believes the single network will spur competition in the telecoms market and ultimately bring down the price of calls.
No revenue impact
He adds the decision will put pressure on, but not affect, the company's revenue. "Through competition and better pricing, we believe we will increase our subscriber base in the long run."
The CCK will implement the new tariff-restructuring regime within the next few months.
Earlier this year, Celtel Kenya filed a complaint with the CCK, stating Safaricom was locking in its subscribers by charging them high tariffs for placing calls to other networks.
Safaricom charged its subscribers $0.71 per minute to call a Celtel line and $0.64 for a call to a Telkom Kenya landline. The company charged $0.11 per minute to call a Safaricom line, according to market reports.
Joseph believes Celtel Kenya's complaints did not affect the CCK's decision to cap the tariffs. "The CCK was expected to reduce the tariffs, but the decision has happened sooner than expected."
The CCK has ordered the two competitors to enter into new interconnection agreements to reflect the new charges, according to Kenyan newspapers.
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