Lowest call rates to fall by 33pc as new telcos fight for market share

Tangaza Pesa chief executive Oscar Ikinu. Tangaza Pesa plans to roll out its mobile phone services using thin SIM card despite hitches facing Equity Bank over the technology. FILE PHOTO

What you need to know:

  • Tangaza, Equity, Zioncell to offer services like those provided by mobile operators
  • Subscribers of the newly licensed operator will pay Sh2 per minute to make calls across all local networks. This is expected to trigger a new wave of price wars in the telecom industry as other operators move to defend their positions.
  • The other two market entrants are yet to announce their rates but it is expected that these will be below the current market rates.

The cheapest tariff to call across all networks will fall by 33 per cent next month on the launch of new mobile phone services by newly licensed operator Tangaza.

Subscribers of the newly licensed operator will pay Sh2 per minute to make calls across all local networks. This is expected to trigger a new wave of price wars in the telecom industry as other operators move to defend their positions.

The firm, which was awarded a mobile virtual network operator’s licence last month, alongside Zioncell and Equity bank’s subsidiary Finserve Ltd, becomes the cheapest voice service provider in the country in line with its strategy to win customers.

Sending an SMS to any local network will cost subscribers Sh1.

Speaking to the Nation, Tangaza chief executive officer Oscar Ikinu said the rates would have been even lower if the mobile termination rate — the price an operator pays to terminate a call on another network — was lower than the current Sh1.15 a minute.  

“For us, voice and data services are value addition to our mobile money customers, who remain our core business. We are looking at the possibility of charging our SMS at 50 cents in the future,” Mr Ikinu said.

Safaricom and Airtel charge a flat rate of Sh3 per minute for on-net calls while calls terminating in different networks are charged at Sh4 per minute.

Telkom Kenya, on the other hand, charges Sh2 per minute for calls within its network and Sh3 across other networks, while yuMobile subscribers pay Sh3 for both on-net and off-net calls.

The other two market entrants are yet to announce their rates but it is expected that these will be below the current market rates.

This could subject the market to a fresh round of price wars, similar to what happened in 2010 after the regulator slashed the mobile termination rates, leaving only one of the four market players profitable.

It will be a big test for the Communications Commission of Kenya to make sure price wars do not lead to collapse of the industry.

Mr Ikinu said the company is finalising acquisition of a licence from the International Telecommunication Union, which will enable Tangaza subscribers to roam and make international calls.

“We want to make sure our customers have access to all the services they have been getting from other mobile number operators.

“This includes calling abroad and using the same Sim card when out of the country on roaming services,” Mr Ikinu said.

The MVNO licence allows the trio to roll out services similar to those offered by mobile number operators such as Safaricom, Airtel and Telkom Kenya, but without having to invest in the underlying infrastructure.

All the three market entrants will operate on Airtel Kenya’s network.

Tangaza CEO said the company would be applying to run its own independent network after the country finishes the migration from analogue to digital television broadcasting system which will free up more spectrum.