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Safaricom in call, data price increases over recent taxes

A Safaricom outlet Moi Avenue
A Safaricom outlet Moi Avenue, Nairobi. FILE PHOTO | NMG 

Safaricom #ticker:SCOM has increased the price of voice calls, data and SMS, passing on to consumers the 15 per cent excise duty tax that the government imposed on telephone and internet services with the coming into force of the Finance Act 2018.

In a statement on its position, firm stated that it has raised the cost of calls by 30 cents, and SMS by 10 cents effective midnight.

Safaricom joins Zuku and Jamii Telecommunications (JTL) in implementing the price increase on their data and call products.

“Additionally, we have also reviewed our prices for mobile data bundles, fibre to the building and fibre to the home to effect the new 15 per cent excise duty tax on internet services,” said Bob Collymore, chief executive officer Safaricom in the statement today.

The move comes after Zuku and JTL issued notices to customers notifying them of the new rates.

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“Dear client. Following publication of Finance Act 2018 on 21-Sep-18; 15 per cent Excise Duty has been introduced on Internet data. Please note we have effected the same…” read a notice by Zuku to its clients.

The excise duty applicable on voice, SMS and data was increased from 10 per cent to 15 per cent, in addition to the prevailing 16 per cent Value Added Tax (VAT) on mobile service.

Subscribers on Zuku’s the 10mbps package are now paying Sh3,999 up from Sh3,500 while those previously paying Sh4,198 will now part with Sh4,598.

The tax has pushed up the cost of internet at a time when the dealers are locked in increased competition which has eaten into their profit margins.

Safaricom's price increase comes barely two months after Safaricom slashed its data rates as a result of pressure from consumers for affordable internet.

“We are aware of and regret the impact of these additional taxes on our customers. It is our sincere hope that these changes will not affect the remarkable gains we have made in mobile phone and internet penetration in Kenya,” said Mr Collymore.

Data has been a key competition point between telcos and internet providers, with each seeking an edge over the other on price basis.

The new tax was introduced a few weeks after Safaricom dropped the cost of its prepaid internet bundles.

The Finance Act signed by President Uhuru Kenyatta on September 21 lumped the airtime and internet bundle taxes among those that were supposed to commence on July 1.

The commencement date of the new taxes introduced in the President’s Finance Bill memo to Parliament remains a point of contention for the telecommunication firms.

JTL on October 1 informed its customers that it had effected the 15 per cent levy.

Zuku, which is the leading firm by market share in the fixed internet category in Kenya, has been losing ground to Safaricom’s fibre products.

Latest data from Communications Authority of Kenya (CA) shows Wananchi’s market share for the quarter to June dropped to 30.4 percent compared to 34.4 percent as at March this year.

The firm, however, is still the market leader with 112,155 subscribers after growing its customer base by 438.

Safaricom’s market share grew from 19.4 percent in the last quarter to 21.2 percent by June on the back of aggressive marketing that added 14,537 fixed internet customers between March and June, to hit a total of 78,104 users.

Jamii Telecommunications is fourth with 43,529 subscribers, an 11.8 percent market share.

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