Telkom to hike international call rates

October 31, 2011
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, NAIROBI, Kenya, Oct 31 – Telkom Kenya says it will hike its international calling rates from mid November, citing rising operational costs.

The telecom operator however says its domestic rates will remain untouched as it does not want to burden its customers with higher calling rates, in light of tough economic conditions.

Telkom Kenya Chief Executive Officer Mickael Ghossein told capital Business that operational costs for its base stations had gone up by 30 percent on a monthly basis, affecting the company’s revenue margins.

“We decided to increase the international (rates) because unfortunately we cannot increase the local one. I must say we are not competing with Safaricom but we are in competition to take the place of Airtel and be the second largest operator in Kenya,” Ghossein said.

Ghossein said expensive energy and a weak shilling which has lost more than 20 percent of its value since January are the main contributors to the steep rise in the cost of imported network materials and ultimately operational costs.

“There is not much elasticity to play around with because if we increase our local calling rates we risk losing our customers,” Ghossein said.

Kenyans have been enjoying cheaper calling and texting rates since August last year when the Communications Commission of Kenya (CCK) issued guidelines that cut interconnection rates by 50 percent to Sh2.21 per minute.

President Mwai Kibaki however issued a directive halting the glide path as operators such as Telkom and Safaricom lobbied the government to stop it, arguing it was having a negative effect on their business.

Earlier in the month, Safaricom increased the cost of calls originating and terminating within its own network by 30 percent and those ending in rival networks by 25 percent, signalling the end of an era of low calling rates.

CCK data indicates that Telkom Kenya was the only operator that gained subscribers in the six months to June with its market share grew to 10.7 percent in June from 8.5 percent in December; a gain Ghossein is keen on building on.

“Today there is no growth in voice but at the same time we must protect our margins. To increase the company revenues we have to go into value addition which we will do through our data,” the Telkom CEO said.

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