Safaricom hit by price controls as inflation bites

Leading telco Safaricom has been forced to cut the cost of calls, mobile money transactions, merchant paybills and its Fuliza credit facilities as regulators and government impose price controls on the company’s business lines. 

Safaricom was forced to reduce charges on lower volume M-PESA transactions by up to 45 percent as a condition to resume charging mobile money transactions below Kes1000 when the Central Bank of Kenya (CBK) lifted the Covid-19 moratorium in December 2020.

The Communications Authority of Kenya (CA) then came for the telco’s call rate charges, forcing Safaricom to cut mobile termination rates (MTR) by 41.4 percent from Kes0.99 per minute to Kes0.58 per minute, to reduce the cost on other operators for terminating their voice calls on its grid.

President William Ruto’s Kenya Kwanza government pursuing its populist promise to bring down the cost of mobile loans also went for the telco, pressuring it to slice off daily charges on Fuliza loans below Kes1000 by 50 percent daily charges for loans below Kes1000 and introducing a three-day grace period.

The CBK was again at it in January this year, slashing charges on Safaricom’s ubiquitous merchant accounts, paybills, by 50 percent.

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The charges were announced during the re-introduction of charges from mobile money to bank accounts which have also been slashed down 45 percent.

As Safaricom grows into a technology company and integrated with more services, it is increasingly coming under regulatory watch and risks unforeseen caps on its revenue streams.

These price caps have coincided with rising inflation that is pushing State functionaries towards price control-like policies that may continue to hit businesses as consumers intensify calls on prices to come down.

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