Safaricom's Ethiopian arm receives a boost as the nation's telecom regulator slashes mobile termination rates (MTR) by a quarter, reducing the cost of connecting its customers' calls with those of rival Ethio Telecom. The Ethiopian Communications Authority (ECA) lowered the rate to 0.23 Ethiopian Birr (Ksh0.54) per minute from ETB0.31 (Ksh0.72) per minute, representing a 25.8 percent decrease.
These revised rates, effective from May 1, will remain in force until the end of April next year, with further reductions planned. This move follows a cost study by the regulator aimed at creating a level playing field for operators, including Safaricom Telecommunications Ethiopia Plc and Ethio Telecom.
With Safaricom owning 51.67 percent of the latter, the aim is to foster fair competition, curb anti-competitive behavior, and ensure a market structure that benefits consumers with varied choices and competitive prices, as stated by Balcha Reba, ECA's director general. Mobile network call termination is pivotal for enabling cross-network connectivity; without it, communication would be confined within the same network, limiting mobile service outreach.
Ethiopia's MTR now aligns closely with Kenya's, which recently decreased to Ksh0.41 per minute from Ksh0.58 in March 2024. However, while these cuts adversely affect Safaricom's revenue, particularly with its significant subscriber base, the Ethiopian subsidiary managed to onboard nine million customers within nine months.
Despite Ethio Telecom's larger subscriber count of 74.6 million last year, Safaricom's Ethiopia unit aims to expand its reach with voice, SMS, and mobile money services, aiming to surpass its previous nine-month revenue of Ksh4.8 billion, with Ksh678 million from voice services. As of December, last year, Safaricom's Ethiopia unit operated 2,242 base stations across 33 cities, including 1,252 it built.
