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Communication costs rising again in Africa

Major operators are all raising calling rates

The cost of communication in Africa is once again going up as competition coupled with rising inflation rates dig into mobile operators' profit margins.

Africa's major operators including Bharti Airtel, Warid, Orange and MTN have all increased their calling rates due to rising inflation and the cost of doing business in the region.

A price war in eastern and southern Africa led to more investment by international operators. But while low prices allowed operators to grow subscriber numbers, they did little to boost the operators' revenue and tax contribution to governments.

The competition has resulted in a decline in the quality of service by operators, including congestion, more dropped calls, connection failures and slow message delivery. Some operators charge consumers for calls that do not go through. The Competition and Consumer Protection Commission (CCPC), a commission that protect consumers in Zambia from exploitation by operators, has warned that it would punish such operators.

"Mobile operators are charging for calls that do not go through on both intra and across networks. We are warning them that this will attract a penalty," warned Vaida Bunda, CCPC public relations officer in a statement this week.

Operators are, however, hoping that the rate increases will help them make enough profits to expand their networks and invest in new technologies.

Most African countries including Zambia, Malawi, Uganda and Kenya had the cheapest calling rates due to stiff competition. But these countries are now facing increasing inflation rates, which operators claim have forced them to charge more for calling rates.

Over the past year, the time that people in Africa spent talking on the phone increased from an average 70 minutes per person per month to over 100 minutes, due to the drop in calling rates. But with the increase in tariffs, the situation is expected to change as many people, especially in rural areas, will not be able to afford long phone calls.

In Zambia, the government has suspended all taxes imposed on communication equipment imported in the country by mobile operators in a bid to quicken network roll out in remote rural areas that have no mobile communication. The Zambian operators claimed they were not making enough from the voice market to enable them to expand their services to rural areas.

"The Zambian government would continue to engage the private sector and to come up with policies that make it easier to promote the proliferation of ICT at all levels and to all parts of the country," said Dominic Sichinga, permanent secretary in the Zambian ministry of Communications and Transport in a phone interview this week.

The Zambian government has already refused to license a fourth operator until 2015 in order to slow down competition by operators and allow them to improve and expand their networks.

The latest Wires Intelligent Report titled, "How pricing dynamics affect mobile usage," found that the effective price per minute of mobile voice calls has fallen from a global average of $0.32 in 2001 to just $0.09 last year. The whole of western and central Africa are now looking to see whether the move by operators in eastern and southern Africa to increase tariffs will help operators increase their revenue enough to rapidly expand their networks.


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