Essar Kenya Ups the Game With a 50 Cents Per Minute Promotion

This is going to get nasty. Yu is launching a 50 cents per minute promotion even before the new Mobile termination rates comes into effect. The Ksh 1.44 termination rate is suppose to come into effect as from July 1st falling from Ksh 2.21. But this is just a promotion.

The daily voice bundle promotion dubbed ‘amua mdogo mdogo’ enables customers on the network to make calls within the yu network for 50 cents per minute all day and all night. You will subscribe with Kes.2 per day and then enjoy the calling rate of 50 cents per minute for that day and night. To enjoy this new offer, yu subscribers have to dial *121#, choose mdogo mdogo and the daily subscription kicks in.

But the move might not go down well with Safaricom and Orange who have both been opposing the low rates being witnessed in the market.

Safaricom and Orange wrote to CCK seeking the intervention of the regulator on the fast falling termination rates. In Kenya, the regulator uses the Pure Long Run Incremental Cost (LRIC) formular for determining the termination rates. This formular is not widely used except for a few European countries and Safaricom and Orange feels that it is not the best formular for a market like Kenya.

LRIC model of determining termination rates permits recovery of shared and common costs, while pure LRIC only permits the recovery of costs directly caused by the incremental termination of voice minutes, assuming that all other costs have already been incurred.

A task force set at the Prime Minister’s office was suppose to give the way forward on 10th May. Not much has been heard from them. We have contacted Mr Kasuku who heads the PM office’s committee and will update when he responds to our queries.