• Regulators have a common goal: to bolster competition among operators
Image: HOPE MUKAMI
Telco regulators in three countries are reviewing cross-network rates, igniting new price wars and potentially cheaper calls.
Mobile phone users in Ethiopia and South Africa will enjoy lower calling rates between operators from May while Kenyans are already seeing savings, as African communication regulators move to adopt pricing models that benefit customers.
The Ethiopia Communications Authority (ECA) has adopted a top-down pricing model that will ensure uniformity for all players, while the Independent Communications Authority of South Africa (Icasa) is looking at a wholesale model, with rates charged depending on a telco's size.
While these models differ, the regulators have a common goal: to bolster competition among operators and offer consumers more choice and competitive prices on off-net calls.
According to a statement by the ECA, all mobile operators in Ethiopia will be required to amend their interconnection agreements to reflect a 25 per cent drop in mobile termination rates from $0.0054 to $0.0044 (Sh0.73 to Sh0.59) per minute before May 1, 2024.
“The intention is to promote competition among operators, prevent anti-competitive behaviour and encourage a market structure that benefits consumers by offering them a variety of choices and competitive prices,” ECA director general Balcha Reba said.
Over the next five years, Ethiopians are expected to enjoy cheaper and cheaper calls thanks to annual price drops that will ultimately see termination rates stand at 0.19 birr (Sh0.45) per minute by 2029.
“The use of cost-based rates is seen as a pro-competitive measure to foster a more balanced and competitive telecommunications market,” Reba said.
The biggest beneficiary will be Kenya’s Safaricom, which owns 51.67 per cent of Safaricom Telecommunication Ethiopia PLC. The recently formed telco had onboarded more than 9 million subscribers as of December 2023, against Ethio-Telecom’s 74.6 million subscribers.
Safaricom launched commercial operations in Ethiopia in October 2022 with hopes of winning clients in voice, SMS and mobile money, leveraging on the liberalisation of the country’s telecommunication sector.
In Kenya, subscribers have already begun experiencing cheaper calls after the Communications Authority of Kenya (CA) further reduced Mobile Termination Rates (MTR) from $0.0043 (Sh0.58 per minute) to US$ 0.0031 (Sh0.41 per minute), effective March 1, 2024.
Airtel Kenya in mid-April announced changes in its cross-network rates with the firm’s managing director Ashish Malhotra expressing optimism for future MTR reductions to increase sector competitiveness.
“Historically, high termination rates have presented challenges for service providers in delivering flexible and affordable call rates across networks,” Malhotra said.
“Therefore, we hope that MTRs will continue to decrease for the utmost benefit of consumers.”
In South Africa, the Independent Communications Authority of South Africa (Icasa) is working to phase out asymmetry between what large and small operators can charge, while allowing new entrants to charge on asymmetry for a limited period of three years and then qualify for uniform charges.
Currently, South Africa’s telecom sector faces challenges, the regulator said. These include a lack of provision of access, potential for discrimination between licensees offering similar services, lack of transparency and inefficient pricing.
Through a Draft Call Termination Amendment Regulations 2024 that was published for public comment in March, large operators like Vodacom and MTN, with more than 20 per cent of total minutes terminated to the mobile location by December 2023, are to drop their mobile termination rates from $0.0047 to $0.0037 (Sh0.63 to Sh0.50) per minute by July 1, 2024.
Small operators with less than 20 per cent of total minutes terminated to a mobile location are to cut down their termination rates from $0.0068 to to $0.0047 (Sh0.91 to Sh0.63) per minute, while new entrants will charge $0.0037 (Sh0.50) per minute in off-net calls.
In a statement, Icasa council committee chairperson Nompucuko Nontombana said the authority is taking a significant stride in creating a more competitive and consumer-friendly telecommunications landscape with the publication of draft amendments to the Call Termination Regulations.
“By phasing out asymmetry and providing a transitionary period for new entrants, we aim to empower operators to adapt gradually, all while maximising benefits for consumers,” she said.
The authority believes the wholesale voice call termination rates set out in the draft regulations will aid in transitioning the market towards a more competitive landscape.
“The authority is confident these wholesale voice call termination rates will not only meet the objectives of the ECA [Electronic Communications Act] but also pave the way for a more dynamic and consumer-centric telecommunications market,” Nontombana said.