Cheaper call rates coming as more African countries lower costs

African countries reducing call rates

A number of African countries are reviewing calling costs between operators - inside and outside country borders.

Photo credit: File | Nation Media Group

What you need to know:

  • A number of countries on the continent are reviewing calling costs between operators - inside and outside country borders - as African regulators push for a level playing field and fair competition.
  • Kenya and Namibia are the latest countries to make cuts on the rate a mobile phone operator may charge its rival for interconnecting customers, signalling lower calling rates in Africa.

    From October, Namibian mobile termination rates on mobile and fixed line phones is to be reduced by 50 percent. This is expected to result in lower costs for operators, which should be passed on to consumers.

Kenya and Namibia are the latest countries to make cuts on the rate a mobile phone operator may charge its rival for interconnecting customers, signalling lower calling rates in Africa.

From October, Namibian mobile termination rates - the amount that one company charges another to complete outgoing calls on its network -  on mobile and fixed line phones is to be reduced by 50 percent. This is expected to result in lower costs for operators, which should be passed on to consumers.

“One of the largest cost components for operators is that of interconnection, and this reduction shall therefore enable more competition in the sector,” said Communications Regulatory Authority of Namibia CEO, Emilia Nghikembua. 

“For now, consumers will not directly benefit from this reduction in terms of paying less for voice calls but may indirectly benefit from increased competition in the industry which will increase the variety of services and products,” Nghikembua said.

After a six-year freeze, Kenya’s Communications Authority in August brought down mobile and fixed termination rates from Ksh 0.99 (US$ 0.0082) to Ksh 0.58 (US$ 0.0048).

The regulator had proposed reducing the rate to US$ 0.0010 but mobile network operators challenged the move. It said it would reconsider the rate, based on market research, in a year's time. The new rates provide an incentive to offer users a more competitive service, the communications authority said.

In an apparent departure from the trend lower, the Nigerian Communications Commission has reviewed international termination rates upwards. However, the regulator then offered domestic operators a 21 percent discount on the new rates to ‘ensure a level playing field that recognises the unique disposition and characteristics of genuine market participants’ - appearing to punish foreign operators and help local telecoms firms. The final beneficiary would be Nigerian consumers, according to the commission.

“The outcome of the various engagements, will make a significant contribution to the development of the telecoms sector in Nigeria and be beneficial to subscribers, operators, and the country at large,” said the Nigerian regulator.

South Africa also appears to be working to lower consumer costs, with plans to review international termination rates to ‘fair’ and ‘reasonable’ levels under a cost-modelling process.

As part of the plan, the Independent Communications Authority of South Africa (ICASA) in March said it would retain pro-competitive license terms and conditions to address market failures. Some of these measures include compelling operators to charge cost-based pricing and publish their reference interconnection offers.

“Neither retail nor wholesale constraints are likely to be effective in preventing a wholesale voice call termination services provider (mobile or fixed) from setting termination rates above competitive levels in the absence of a regulatory intervention,” ICASA noted in its findings in a review of its termination policies.

Consequently, the country will scrap its current asymmetric mobile termination rates in favour of a model where all networks pay each other at the same rate - within a transitional period of twelve months.

South Africa’s national termination rate has dropped from R1.25 per minute in 2009 to R0.13.

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