Cross-border calling rates to remain high for Rwandans - telecoms
Saturday January 25 2014
Local telecommunication companies have warned that cross-border calls will remain expensive for Rwandans unless government scraps unnecessary charges.
The firms are accusing the Rwandan and regional governments of increasing taxes on calls, while at the same time expecting telecoms to slash call tariffs.
In a meeting held in Nairobi last month, Information Ministers from EAC 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 next month.
The formation of the committee followed 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.
Rwanda Utility and Regulatory Authority (Rura) recently introduced new charge on all incoming calls, a cost the operators have passed on to consumers.
MTN Rwanda has different tariffs for Uganda and Kenya where it costs Rwf120 and Rwf216 to make calls to two countries respectively. As a result of high taxes and charges, it is more expensive for Rwandans to make calls to the East African countries than it is in Europe and America.
“The regional committee should come up with pro-people policies, which will not transfer the burden of taxes to consumers. The only way to do this is by reducing taxes on incoming calls and other unnecessary charges,” said Sam Nkusi, the chairman of Liquid Telecom (Rwanda).
READ: No tax: Calling rates set to fall in four EA countries
Rwandans make more calls to neighbouring countries mostly Uganda, Burundi, DR Congo and Tanzania because of business transactions and historical ties.
Investors with businesses across the East African countries have already complained of high costs as a result of increased calling rates.
Mr Nkusi urged regional governments to make sure that local tariffs are maintained within the economic bloc to reduce the cost of doing business.
“Local call tariffs is made to pass through other countries where there are charges before it reaches the intended recipients in the region, and this increases cost of doing business for telecoms,” added Mr Nkusi.
However, Rura has remained tight-lipped about possible reduction of the high taxes imposed on the telecoms.
“Yes, there are issues to do with taxes but we are waiting to see the outcome of next month’s committee meeting before that, we cannot say much about the harmonisation of call rates,” said Jean Baptist Mutabazi, the director of communications at Rura.
According to Rura statistics as at the end of September last year, the mobile telephone subscribers in Rwanda increased from 6,415,343 million to 6,709,785 million, representing a 4.3 per cent increase.
This is a mobile penetration rate of 63.7 per cent compared with 60.9 per cent recorded at the end of the second quarter.
Fixed telephone subscriptions in the same period under review were 43, 963 from 42,800, representing 0.42 per cent penetration rate.
The number of Internet subscriptions was 1,674,053 million, representing the Internet penetration rate of 15.8 per cent.
Mobile penetration rate in the country reached 63.7 per cent as of September 2013 compared with 60.9 per cent in June 2013.
MTN Rwanda has the highest number of subscribers at 54 per cent followed by Tigo, which has 31 per cent while Airtel Rwanda has the lowest market share of 15per cent.
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.
Kenya’s Safaricom, in a protest letter to Kenya’s Cabinet Secretary for East African Affairs, Commerce and Tourism Phyllis Kandie, said the new taxes, averaging $0.12 per minute, were a non-tariff barrier that would slow trade in the East African Community.
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.
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.