BY JEVANS NYABIAGE
Mobile phone service provider, Safaricom has increased voice-calling rates by Sh1, pointing blame on high inflation and depreciating Kenyan shilling.
It will now cost Sh4 to make Safaricom to Safaricom calls and Sh5 to other networks. The operator also increased international calling rates, however, data services and text messaging will remain unchanged.
"Safaricom will be very sensitive to the tough times facing customers when increasing tariffs but the business must be sustainable," the firm’s chief executive officer Bob Collymore said, in a press briefing on Friday.
"The nature of our business is that most of our purchases are in foreign currencies."
The company is Kenya’s largest mobile phone services operator by subscriber base.
Collymore said inflation and a weak shilling as well as the high cost of diesel used in generators to run base stations that are away from the main electricity grid were among factors that had seen the company’s operating expenditure rise.
"This is perhaps one of the most difficult decisions that my management team and I have had to make," he said.
This makes the operator, currently the most expensive in the voice segment.
In contrast though, earlier this week, Essar Telecom’s yu converted its free-all-day promotion into a tariff, in which its subscribers pay Sh2 to make calls free calls between 6am and 6pm.
Yu said its decision to settle for a permanent tariff, is due to the need to grow its customer base.
The operator is targeting the youth and lower segment of the market, who have a preference for lower calling rates.
Currently Airtel charges Sh3 across networks, while Telkom Kenya’s Orange charges Sh1 for onnet calls and Sh4 for offnet.
Call increases are not unique to Kenya, in Uganda Airtel and MTN Uganda hiked their call rates. In India, Bharti Airtel increased its call rates in a number of regions.
Safaricom has over time maintained that the ‘rock bottom’ calling rates were not sustainable and that it would be just a matter of time before costs went up again.
The company has in the recent past criticized the price war led by its chief rival Airtel Kenya.
Call rates significantly fell last year following reduction in mobile termination rates by the Communications Commission of Kenya from Sh4.42 to Sh2.21.
A price war ensued after Airtel Kenya cut rates by more than 50 per cent and unleashed a vicious re-branding onslaught.
However, Safaricom still saw its active customers grow by 8.8 per cent to 17.18 million in its financial year of 2010/2011.
Safaricom reported a 13 per cent drop in pre-tax profit for the year ended March 2011 Sh18.3billion down from the record Sh21billion recorded the year earlier.
