Safaricom lowers call charges ------------------------------------------------------------------------ By Brian Adero Just days after the Government ignored calls to lower excise tax on mobile airtime, Safaricom has announced major reductions in its calling rates. The changes, which take effect immediately, affect all of the mobile firm's tariffs and include cuts for calls to other networks. They come two weeks before a Communications Commission of Kenya (CCK) deadline for telecommunications firms to lower their base charges for calls across networks (interconnect charges). Subscribers using prepaid services will now save up to 38 per cent, while those on post-paid plans will spend 20 per cent less for calls to other Safaricom subscribers. Charges for calls to other networks are down up to 50 per cent. The changes are the single most significant step in lowering calling rates since rival network Celtel Kenya introduced a tariff offering a flat rate of Sh16 to all networks. Chief Executive Officer, Mr Michael Joseph, said the lower rates were introduced in response to customers' demands. "We want to make sure that everybody can afford to use a mobile phone," Joseph said. Safaricom said it has reduced the cost of calls to rival networks from a high of Sh50 per minute on one tariff, to Sh25 during off peak periods and Sh30 during peak periods. The company has also reduced the cost of text messages within the network from Sh5 per message to Sh3.50 during peak periods and Sh2.50 during off peak periods. Call set up fees and daily access fees have also been scrapped as the firm shoots for "simpler and more affordable tariffs". * No effect on revenue * A Celtel Kenya communications officer says the firm is also planning further cuts. "Safaricom has just reacted to the deadline given by CCK directing them to reduce the interconnect charges by June 30," he said. "We are working on our study and strategy and will unveil them to our customers soon." Joseph said the reductions would not affect Safaricom's revenue because the company expects an increase in its subscriber base, which was 5.5 million as at February 1. The six-year-old mobile operator last year reported a 45 per cent increase in pre-tax profits to Sh12.2 billion, making it the region's most profitable company. The profits were made off 3.9 million subscribers, about 1.5 million fewer than the company has today. Joseph attributes Safaricom's growth to a significantly increased network rollout in rural areas as well as the popularity of its low-denomination airtime credit voucher, 'Bamba 50'. On June 5, Safaricom and its sole competitor, Celtel Kenya, asked the Government to remove or cut a 10 per cent excise duty charged on airtime for mobile phones in the annual budget presented by Finance minister, Mr Amos Kimunya, on June 14. Kimunya neither reduced nor abolished the tax. "We are still going to continue lobbying for reduction in excise tax because as both our competitor and ourselves have said, taxes on airtime are very high," Joseph said. In addition to the excise duty, the Government levies a value added tax of 16 per cent on the cost of mobile phone calls. Analysts say mobile airtime is a relatively 'price inelastic' good (demand remains the same for a range of prices), so Government can raise taxes off it without significantly hindering growth. Vodafone effectively owns 35 per cent of Safaricom, while the Government holds 60 per cent through Telkom Kenya. A five per cent stake is held by Mobitelea Ventures, a Guernsey-registered company whose ownership is unknown. Kimunya last week said he expected to offer shares in Safaricom to the public within the next 12 months. -- -------------------------------------------------------------------- Life's most urgent question is: What are you doing for others? .........Martin Luther King, Jr. -------------------------------------------------------------------- __._,_.___ Messages in this topic <http://groups.yahoo.com/group/DigAfrica/message/6033;_ylc=X3oDMTM0NWljcnM0BF9TAzk3MzU5NzE0BGdycElkAzI5MDI0NDQEZ3Jwc3BJZAMxNzA1MTE2MjkxBG1zZ0lkAzYwMzMEc2VjA2Z0cgRzbGsDdnRwYwRzdGltZQMxMTgyMjM5NzgzBHRwY0lkAzYwMzM-> (1) Reply (via web post) <http://groups.yahoo.com/group/DigAfrica/post;_ylc=X3oDMTJwaDdlOXZoBF9TAzk3MzU5NzE0BGdycElkAzI5MDI0NDQEZ3Jwc3BJZAMxNzA1MTE2MjkxBG1zZ0lkAzYwMzMEc2VjA2Z0cgRzbGsDcnBseQRzdGltZQMxMTgyMjM5Nzgz?act=reply&messageNum=6033> | Start a new topic <http://groups.yahoo.com/group/DigAfrica/post;_ylc=X3oDMTJlMWRoaG5sBF9TAzk3MzU5NzE0BGdycElkAzI5MDI0NDQEZ3Jwc3BJZAMxNzA1MTE2MjkxBHNlYwNmdHIEc2xrA250cGMEc3RpbWUDMTE4MjIzOTc4Mw--> Messages <http://groups.yahoo.com/group/DigAfrica/messages;_ylc=X3oDMTJlaGtoMWQ0BF9TAzk3MzU5NzE0BGdycElkAzI5MDI0NDQEZ3Jwc3BJZAMxNzA1MTE2MjkxBHNlYwNmdHIEc2xrA21zZ3MEc3RpbWUDMTE4MjIzOTc4Mw--> | Links <http://groups.yahoo.com/group/DigAfrica/links;_ylc=X3oDMTJmMWVlZG80BF9TAzk3MzU5NzE0BGdycElkAzI5MDI0NDQEZ3Jwc3BJZAMxNzA1MTE2MjkxBHNlYwNmdHIEc2xrA2xpbmtzBHN0aW1lAzExODIyMzk3ODM-> | Polls <http://groups.yahoo.com/group/DigAfrica/polls;_ylc=X3oDMTJmNmh0azJvBF9TAzk3MzU5NzE0BGdycElkAzI5MDI0NDQEZ3Jwc3BJZAMxNzA1MTE2MjkxBHNlYwNmdHIEc2xrA3BvbGxzBHN0aW1lAzExODIyMzk3ODM-> Dig Africa site welcomes you to join us at http://www.yahoogroups.com/group/Digafrica on IT in Africa Aids-Africa is a forum for communication and information on AIDS related issues in Africa and all are welcome to join us at http://www.yahoogroups.com/group/aids-africa Join us on hiv/aids forum on Kenya at http://www.yahoogroups.com/group/kenya-aids Join us at a Kenyan networking forum and NGOS at http://www.yahoogroups.com/group/kenyainternational Yahoo! 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