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Cheaper calls ring in Ethiopia, South Africa and Kenya

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, these 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% drop in mobile termination rates from US$ 0.0054 (ETB 0.31 per minute) to US$ 0.0044 (ETB o.25 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,” said ECA Director General, Balcha Reba.

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 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% of Safaricom Telecommunication Ethiopia PLC. The recently formed telco had onboarded over 9 million subscribers as of December 2023, against Ethio-Telecom’s 74.6 million subscribers.

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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 US$ 0.0043 (KES 0.58 per minute) to US$ 0.0031 (KES 0.41 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. Therefore, we hope that MTRs will continue to decrease for the utmost benefit of consumers,” Malhotra said.

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, the regulator said, faces challenges including 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% of total minutes terminated to the mobile location by December 2023 are to drop their mobile termination rates from US$ 0.0047 (R 0.09 per minute) to US$ 0.0037 (R 0.07 per minute) by July 1, 2024.

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Small operators with less than 20% of total minutes terminated to a mobile location are to cut down their termination rates to US$ 0.0047 (R 0.09 per minute) from US$ 0.0068 (R 0.13 per minute) while new entrants will charge US$ 0.0037 (R 0.07 per minute) in off-net calls.

“In creating a more competitive and consumer-friendly telecommunications landscape, ICASA takes a significant stride with the publication of draft amendments to the Call Termination Regulations,” said ICASA council committee chairperson Nompucuko Nontombana in a statement.

“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.”

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,” added Nontombana.

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