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Airtel seeks lower mobile tariffs for small telco players

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Mr Prasanta Das Sarma, Airtel Kenya chief executive officer, during a past product promotion. FILE PHOTO | NMG

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Summary

  • The telco said lower tariffs commonly referred to as mobile termination rate (MTR) would help rectify market imbalances, marking its latest push to halt the dominance of Safaricom.
  • Industry regulator Communications Authority of Kenya (CA) last month cut the rates from Sh0.99 to Sh0.12 per minute even after it said Airtel’s proposal would be reviewed in a cost evaluation later on.

Airtel lost a bid to have small telcos pay 50 percent less than Safaricom #ticker:SCOM in the fees that the firms charge one another for interconnecting customers on their networks.

The telco said lower tariffs commonly referred to as mobile termination rate (MTR) would help rectify market imbalances, marking its latest push to halt the dominance of Safaricom.

Industry regulator Communications Authority of Kenya (CA) last month cut the rates from Sh0.99 to Sh0.12 per minute even after it said Airtel’s proposal would be reviewed in a cost evaluation later on.

“Airtel proposed asymmetric rates whereby the smaller players pay 50 percent less than the largest operator,” says the CA in a review of stakeholder views gathered before it cut the MTR.

“Airtel are of the opinion that asymmetrical interconnection rates over a fixed period of time, are a tool that regulators can use to correct the imbalance in competition and bring relief to small operators.”

Safaricom did not submit views on the MTR rates with analysts saying Telkom Kenya and Airtel will be the main beneficiaries of the proposal along with consumers.

“The proposal on symmetric vs asymmetric rates shall be considered during the detailed network cost study,” said the regulator.

Airtel’s proposal mirrors practices by European nations that have adopted a similar fees model that is referred to as asymmetric MTRs.

Countries deploy the model to assist new entrants to compete against the established or dominant players in the telecommunications industry.

In Europe, the small players or new entrants enjoy lower MTR rates for up to four years which is considered long enough to attain a market share of between 15-20 percent, which is considered as the minimum efficient scale.

Airtel’s proposal is among several by the company and Telkom Kenya, which the firms say are necessary to deal with what they describe as imbalances in the market.

Safaricom’s share of the voice market in December rose to the highest level in three years, cementing the telco’s dominance as the shares of its rival dropped.

The CA data shows Safaricom’s share of the voice market grew to 69.2 percent in the three months to December from 64.7 percent in September.

Airtel’s share of the voice market dropped to 28.5 percent in the period under review from 32.1 percent in September while Telkom Kenya’s share fell to 2.2 percent from three percent.

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