A mobile phone user on the street of Nairobi in 2010. The Communication Authority of Kenya is going to slash the Mobile Termination Rate to 12 cents from the present 99 cents.
This will make it much cheaper for Airtel and Telkom subscribers to make calls to Safaricom.
Safaricom opposes the CAK proposal. Safaricom believes there should be an ‘incremental’ review of the present MTR rather than the international benchmarking method used by the CAK.
Safaricom has over 70 percent market share of voice calls which is partly sustained by the lower interconnection rates between Safaricom users. That may be threatened if Airtel users can connect cheaply to Safaricom users.
But, on the other hand, Safaricom may end up getting a much higher volume of calls if the MTR is reduced. Its gross revenue may only drop marginally.
Furthermore, many Kenyan have multiple Sim cards to enable them to connect cheaply within each network. If the interconnection cost is slashed, Kenyans are likely to use one Sim only and that is more likely to be Safaricom because of Mpesa and other benefits. That will bring more traffic to Safaricom.
So, at the end of the day, the reduced MTR may help Safaricom rather than hurt it.
Quote of the day: "China is an attractive piece of meat coveted by all, but very tough, and for years no one has been able to bite into it."
Zhou Enlai
The Chinese premier was born on March 5, 1898
