Kenya’s Safaricom hikes call rates

Mobile phone service provider Safaricom has increased voice-calling rates by Sh1 (about US $0.00978) due to the rising inflation that is currently depreciating the Kenyan shilling.

Bob Collymore, Safaricom CEO (image source: file photo)

This is despite Safaricom assuring subscribers that they would not increase the call rates.

Defending the recent rate hike, Safaricom Chief Executive Bob Collymore said: “As you are no doubt aware, our country Kenya is facing one of its most difficult and challenging economic situations in recent years. The overall rate of inflation now stands at 17.32%  for September, the highest it has been since 2008 and the attendant devaluation of the Kenyan shilling can only be said to be reminiscent of the economic downturn witnessed in the 1990s and the period following the last general elections,”

“Closer home, the last few months have seen a rapid decline in the value of the Kenya Shilling versus internationally traded currencies, in particular the US dollar, against which our currency has devalued by over 25% as compared to the same time last year. This in turn has contributed to significant volatility in the price of petroleum products, with the benchmark cost of diesel fuel, which powers the Kenyan economy rising by over 27% in the last nine months alone,” said Collymore.

“Due to the nature of our business, which is heavily reliant on both the regular importation of US dollar-denominated capital equipment and a very high dependency on energy sources such as the national electricity grid and diesel fuel to power our extensive telecommunications network, we have seen our operational costs escalate month on month to what we now feel to be unsustainable levels in the context of our operating environment.

Collymore said it was for these reasons that he was formally announcing Safaricom’s decision to “adjust our retail voice tariffs with effect from Saturday 1st October 2011”.

“In coming to our decision on the level of the tariff adjustment, we have taken into account the sentiments of our customers: that they too are facing tough economic times and that they too need some respite in the face of the rising cost of living. To this end, we intend to implement a marginal price increase of KES 1/ per minute on all our headline voice tariffs,” he added.

Safaricom calls will now cost $0.04cents for Safaricom to Safaricom calls and $ 0.05 cents to other networks. The operator also increased international calling rates; however, data services and text messaging will remain unchanged.

“This is perhaps one of the most difficult decisions that my management team and I have had to make,” said Collymore.

The increase in voice-calling rates makes Safaricom the most expensive operator in the voice segment.

Barely last week, Essar Telecom’s Yu Mobile converted its free-all-day promotion into a tariff, in which its subscribers pay Sh2 to make 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, which have a preference for lower calling rates.

Airtel on its part charges Sh3 across networks, while Telkom Kenya’s Orange charges Sh1 for on-net calls and Sh4 for off-net calls.

Safaricom has 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  past criticised the price war led by its chief rival, Airtel Kenya.

Stewart Chabwinja