CA Might Further Reduce Mobile Termination Rates

The Communications Authority of Kenya (CA) has said that it might consider further reducing the mobile termination rates.

Safaricom had filed a petition disputing the new charges as soon as they were announced. The telco argued that the rates were not developed procedurally, and the CA failed to consider public input when it adjusted the fees.

As stated by the CA before, termination rates have been adjusted to KES 0.12 per minute from KES 0.99 per minute and applied by both fixed and mobile operators for connecting calls on their networks.

The leading telco makes a substantial amount from termination charges because of its big market share. The voice market, for instance, favours Safaricom at 68.9%. This means that customers in other networks, namely Telkom and Airtel, make more off-network calls because their friends and family are using Safaricom.

Airtel pays nearly $2.6 million per month to Safaricom in termination fees (using the older rates). It, therefore, earned about $57.2 million per year, while paying out only $22.8 million to competitors. Smaller players and customers are likely to benefit from the development.

Termination rates are basically wholesale tariffs levied by the telco of a user receiving a phone call to the operator of the caller’s network. As part of the cost of a call between customers of different carriers, termination rates are part of your phone bill and are paid by consumers.