Cross-border calls could cost less if countries hammer out agreement

Saturday December 21 2013
mobile phone

Making calls. Calling charges in the region are likely to come down if Kenya, Uganda, Rwanda and South Sudan implement a plan to abolish taxes on cross-border calls within the four countries. Photo/FILE

Calling charges in the region are likely to come down if Kenya, Uganda, Rwanda and South Sudan implement a plan to abolish taxes on cross-border calls within the four countries.

In a meeting held in Nairobi last week, Information Ministers from the four countries agreed to form a committee that will explore the most economical way of slashing cross-border call charges. Its report is expected to be ready by the end of February next year.

The new development follows an order to the four Ministers by Heads of State of the Coalition of the Willing (CoW) countries during their meeting in Kigali in October.

Telecom firms in the region have complained about high taxes imposed on international calls within the region, saying they affected their business and went against the spirit of the regional integration as well.

READ: Kenya telcos in protest over new EAC call taxes

“It is unfair that it costs more to call within the region than abroad. This has been a concern for a number of years now. We have noticed that telecommunications firms are the easiest targets of the regional governments. As a result, we end up paying taxes in Kenya, Uganda and Tanzania,” said Bob Collymore, chief executive officer of Kenya’s Safaricom.


Cost implication

All East African countries, apart from Kenya, have introduced specific taxes on international calls within the region, which have had a direct adverse impact on calling rates.

This means any calls made by a Kenyan when roaming directly from Kenya are subjected to these taxes, thereby significantly increasing the cost.

“Tackling this issue is therefore critical to manage the high cost of roaming in the region. Given its impact, this should be addressed immediately before considering a cross-border cost study, which may take a long time,” added Mr Collymore.

Uganda’s charges a $0.2-0.25 levy per minute on all international calls into the country while Rwanda’s current charge is $0.22 per minute.

READ: Uganda’s call rates go up as industry consolidates

In response to an upward tax review in Rwanda, regional telecom operators increased their call tariffs as well to cushion themselves from the additional cost of calls terminating in the country.

For instance, MTN Uganda and Vodacom Tanzania raised their call tariffs to Ush1,200 ($0.45) and Tsh700 ($0.43), up from Ush295 and Tsh349.8 per minute respectively.

Similarly, UTL and Safaricom raised their tariffs to Ush899 ($0.35) and Ksh30 ($0.35), up from Ush450 ($0.18) and Ksh18 ($0.21) per minute respectively across all networks in Rwanda.

The same could happen to calling charges in Uganda.

“It makes no sense to have such high tariffs while at the same time pushing for regional integration. Communication is the ultimate enabler, we must make it cheap and efficient,” said Jean Philbert Nsengima, Rwanda’s Minister for Youth and ICT.

The Ministers said the committee would study two models. One, they could consider a proposal to treat regional calls as local calls, thus eliminating roaming charges.

The committee could also propose that the region does a study on the cost of terminating calls and then set an upper cap on what mobile interconnection costs within the region should be.

“We prefer the proposal of treating international calls as local costs. But we have to let the committee do its work so that we are able to understand the implication on not only government revenue but also on mobile operators,” said Fred Matiang’i, Kenya’s Cabinet Secretary for Information and Communication.

CCK data shows Kenya exports approximately 18 million minutes every month to East Africa, meaning the country will be contributing approximately $2.16 million every month to the governments of Uganda, Tanzania, Rwanda and Burundi in taxes for international calls.

The country’s four mobile operators say they pay about $26 million as taxes on international calls originating from Kenya but ending up within the EAC.

The Ministers also said the three countries were looking at ways of harmonising their communication policy and legal framework.

“We want to have uniformity in such matters like SIM card registration…in fact we have agreed to have uniform standards across the region on this,” said John Nasasira, Uganda’s Information Minister.

Dr Matiang’i also revealed that he would gazette tougher registration standards that among things, will criminalise hawking of SIM cards as well demand background information on anyone selling SIM cards.

“I have submitted the new laws to the Attorney General for gazettement… we consulted with stakeholders but in some cases we didn’t agree, but then as a government, we have a duty to maintain high standards in the sector,’ said Dr Matiang’i.