East African countries have recorded an increase in telecommunications traffic attributed to the One Network Area agreement.

According to the latest data from the Communication Authority of Kenya (CA), there has been an increase in mobile phone traffic of 16.9 per cent to 19.1 million minutes, up from 16.3 million minutes posted during the past quarter.

“The increase in traffic within East Africa can be attributed to the opening up of the East African Community borders and increased activities under the Northern Corridor integration projects,” CA said in its third quarter report.

Kenya, Uganda and Rwanda hammered out the One Network Area agreement under the Northern Corridor Infrastructure Integration Framework, which also includes non-EAC member South Sudan. Previously, East African residents had to pay very high cross-border calling rates due to numerous duties imposed by individual governments.

“We believe that the reduced calling rates will improve communication and stimulate growth in the telecommunications sector, which has become an important contributor to member countries’ gross domestic product,” Kenya’s Information Cabinet Secretary Fred Matiangi said during the signing of the agreement.

The One Network Area agreement has reduced the charges for making or receiving calls between other countries in East Africa by 60 per cent, through reduced tariffs for calling different networks.

READ: Cost of calls down as telcos remove roaming charges

In October last year, Safaricom announced that it had reduced its calling charges between Kenya and Rwanda from Ksh25 ($0.29) to Ksh10 ($0.11) per minute, but later rescinded the decision after the Rwandan government announced plans to introduce new levies on international calling and roaming tariffs between the two countries. The two governments have since agreed to remove duties on cross-border calls.

Analysts said the positive outlook for the economy is in favour of the telcos.

“A growth of over five per cent, coupled with availability of cheap phones and increased integration of services via mobile phones including money transfer and Internet usage will see a marked increase in traffic,” said Eric Munywoki, an analyst with Old Mutual Securities.

According to the CA report, Kenya’s leading mobile phone provider Safaricom lost ground to its competitors even though mobile subscriptions increased to 32.8 million from the 32.2 million registered during the past quarter, representing a growth of 1.6 per cent.

The CA report shows that, between July and September last year, Safaricom lost 98,306 mobile phone subscribers in the first quarter, which saw its market share drop from 68 per cent to 66.7 per cent. Competitor Airtel has however written to the CA requesting that Safaricom be declared a dominant player in the market.

“In established competition cases and also in line with the Competition Act, sustained market shares of over 50 per cent give rise to a rebuttable presumption of dominance, while market shares of over 40 per cent are suggestive of possibility of dominance,” said Airtel officials.

CA said it was working with the country’s competition authority to establish whether it is a case of dominance or healthy competition.

“We are working with CA to determine who is dominant in which market so we can gauge the claims in a fair manner. Dominance does not mean abuse of market power and we have no cases where Safaricom has done so,” said Francis Wangusi, CA’S director general.

“We hope to attract more subscribers in all segments as mobile usage and Internet penetration grow. We have seen improved confidence in our products.  We are targeting growth in the voice, SMS, data and mobile-money transfer business shooting,” said Airtel officials.

The number of post-paid and prepaid subscriptions for each of the operators marginally changed during the quarter under review.

Safaricom lost 0.6 per cent of its prepaid subscribers but gained 10.1 per cent post-paid subscribers. Airtel gained 6.9 per cent on prepaid subscribers but lost 3.9 percent of its post-paid subscribers. Similarly, Telkom Kenya (Orange) gained 12.6 per cent prepaid subscribers but lost 9.2 per cent of its post-paid subscribers. Essar Telecom lost 2.7 per cent of its prepaid subscriptions but registered 0.3 per cent additional post-paid subscribers.

The number of mobile money transfer subscriptions grew by 1.4 per cent to stand at 26.9 million, up from the 26.6 million registered during the previous quarter, with Orange recording an increase of 31 per cent in the number of agents on its mobile money network while Mobikash posted an increase in subscriptions at 11.7 per cent.

Orange has registered impressive growth despite uncertainty after an announcement in 2014 that it was up for sale together with its Ugandan subsidiary analyst’s said. The Orange Group last year signed an agreement with Africell Holding for the sale of its majority stake in Orange Uganda.

By Allan Olingo and Scola Kamau