Communications Authority of Kenya (CAK) Director-General Ezra Chiloba on Wednesday, December 22 announced an 87.7% reduction of Mobile Termination Rate (MTR) – the rate telcos charge each other for interconnecting customers.
The MTR was lowered from Ksh0.99 to Ksh0.12, representing a Ksh0.87 drop. The Authority cited developments in mobile telephony and connectivity as informing the move.
It is the first review of the MTR in six years. The rate has fallen consistently from Ksh4.42 in 2010 to Ksh0.99 in 2015 and, now, Ksh0.12.
While mobile service providers are not required to lower tarrifs to match the MTR, it is expected to result in lower call rates.
“Consumers will enjoy lower calling rates following the review.”
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“The review was founded on the recognition that higher MTRs mean higher call rates for consumers,” Chiloba noted in a statement.
Many Kenyans own mutliple SIM cards to avoid the comparatively higher call rates charged when calling people on a different network.
CA highlighted its expectation that the MTR review would lessen the need for consumers to own multiple SIM cards. Analysts note that the slashing of the rate could likely spark a price war among leading telcos.
Market leader Safaricom could face heightened competition for voice services from the likes of Airtel and Telkom who have been lobbying for regulation to even the industry playing field.
In 2010, reduction of the MTR by half, from Ksh4.42 to Ksh2.21, sparked an all out price war among operators resulting in cheaper call rates.
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