The recent move by the telecommunications regulator, CCK to lower the termination rate from KES 2.21 per minute to KES 1.44 is aimed at encouraging competition among the mobile operators which would subsequently result in lower calling rates.

The termination rate is the amount of money an operator pays another operator if its subscribers call another network.

So, who stands to benefit and who stands to lose from this move?

Safaricom has been the greatest casualty in the current mobile price wars. Its on-net voice traffic has reduced by 18.28% and the situation is bound to worsen if its rivals further reduce their off-net calling rates since it would be cheaper calling a Safaricom subscriber from a rival network. It as actually cheaper to call a Safaricom subscriber from a Airtel line. In addition to this, the amount of revenue Safaricom generates from the termination rates will also reduce from KES 2.21 per minutes to KES 1.44. Due to Safaricom’s significant market share of 66.6% it has collected a large amount of termination rates from its competitors. Lowering termination rate would also worsen Safaricom’s competition, making it the greatest loser from this move by CCK.

The greatest beneficiaries will be the subscribers. Lowering termination rates is aimed at enhancing competition which could subsequently result in lower off-net calling rates which would benefit the subscribers.

Airtel and Essar have pushed for the reduction in termination rates after raising the concern that they are paying Safaricom a huge chunk of their revenue. This move would reduce the revenue lost by these operators making them  beneficiaries too.