Safaricom ups calling charges as operating expenses soar

By Jevans Nyabiage

Starting today, it will be more expensive to use your Safaricom line to make calls. Mobile phone service provider Safaricom has increased voice-calling rates by Sh1, blaming high inflation and depreciating shilling for the latest move.

The rates, which take effect today(Saturday), means that it will cost Sh4 to make Safaricom-Safaricom calls between the peak hours of 8am and 10pm, and Sh2 per minute during the off peak hours of 10pm to 8am. Calls to other networks will cost Sh5 per minute.

The operator also increased international calling rates, but maintained data services and text messaging charges at present rates.

"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 Friday.

"The nature of our business is that most of our purchases are in foreign currencies."

Safaricom is the 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 some of the factors that had raised the company’s operating expenditure.

"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, Essar Telecom’s yu converted its free-all-day promotion into a permanent tariff earlier this week. The tariff allows subscribers to pay Sh2 to make free calls between 6am and 6pm.

Yu said its decision to settle for a permanent tariff was informed by its 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 calls.

The increases in call charges 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.

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 afterwards ensued after Airtel Kenya cut rates by more than 50 per cent, and unleashed a vicious re-branding onslaught.

However, Safaricom still grew the number of active customers by 8.8 per cent to 17.18 million in its financial year of 2010/2011.