An Airtel shop in Nairobi. The company has increased its calling rates across networks but lowered tariffs for calls within its network. FILE
What you need to know:
Airtel increased the cost of calling Safaricom, Essar (yu) and Orange to Sh3.60 a minute from Sh3 to encourage its subscribers to rev up calls within its network.
The operator also unveiled a set of voice tariffs that will retail at between Sh1.20 a minute and Sh3 depending on the size of the four call bundles it launched Thursday.
Mobile operator Airtel Kenya has increased the cost of calling rival networks and lowered tariffs for calls within the network in an effort to boost sales and cut termination costs.
Airtel increased the cost of calling Safaricom, Essar (yu) and Orange to Sh3.60 a minute from Sh3 to encourage its subscribers to rev up calls within its network.
The operator also unveiled a set of voice tariffs that will retail at between Sh1.20 a minute and Sh3 depending on the size of the four call bundles it launched Thursday.
The operators pay for interconnecting customers a rate of Sh1.44 a minute and Airtel is betting on increasing on net calls to lower its termination bill that has seen it pay nearly 40 per cent of its revenues to rival firms.
“With effect from today, it will cost Airtel’s pre-paid customers less to make calls from Airtel by choosing any of the affordable Pamoja bundles depending on their daily needs,” Airtel Kenya managing director Shivan Bhargava said in a statement Thursday.
“Out of bundle Airtel to Airtel rate is six cents per second. The rate to other networks will be six cents per second.”
The four bundles include one that allows a maximum calling rate of Sh1.20 for maximum of 25 minutes, Sh1.80 (11 minutes and seven seconds), Sh2.40 (4 minutes and 10 seconds) and Sh3 (1 minute and 40 seconds).
Airtel subscribers, however, will be charged Sh3.60 a minute on per second billing once their calling breaches the maximum limit before asking for their preferred bundle.
The changes comes less than a month after the communication regulator lowered the Mobile Termination Rate (MTR) to Sh1.44 from the current Sh2.21, offering Safaricom rivals relief.
Telkom Kenya, Yu, and Airtel have been paying up to 40 per cent of revenues to Safaricom in connection fee.
But the cut is set to have little impact on call tariffs since the telcos have ruled out lower call rates and will instead absorb the cost savings to boost earnings hit by price wars.
Already, yu, which charges Sh3 a minute for calls within and outside its network, is considering to raise call tariffs as part of a broader plan to raise profitability by 2014 in what could signal the end of a vicious price war that started in 2010.
Safaricom charges Sh4 a minute for both on and off net calls while Orange charges Sh4 a minute across the network and Sh2 a minute within the network.
This means that Airtel call rates remain below its main rival Safaricom, which controlled 80.7 per cent of Kenya’s mobile phone voice traffic in June with Airtel coming second with 11.2 per cent. Essar had a 9.1 per cent stake.
The Communications Commission of Kenya data showed that Airtel subscribers made 51.7 per cent or 1.5 billion minutes calls in the year to June to rival’s networks.
This means that Airtel subscribers made more calls to rivals than within their network. Safaricom subscribers made 872 million minutes calls to rivals compared to its total call minutes of 21.7 billion, meaning off-net calls accounted for 4.01 per cent of its total calls in the year to June. This is the market structure that Airtel is seeking to reverse with its new tariff model.
