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Safaricom of Kenya Raises Call Rates for First Time in 11 Years

Safaricom Ltd. (SAFCOM), Kenya’s largest mobile-phone operator, increased call tariffs for the first time in 11 years amid a weakening currency and rising inflation in East Africa’s biggest economy.

Rates will rise by an average of 1 shilling per minute with effect from tomorrow, Chief Executive Officer Bob Collymore told reporters today in Nairobi. Calls between Safaricom users climb to 4 shillings and calls by subscribers to rival networks rise to 5 shillings, he said.

“What we have set out to do is to run a sustainable business,” he said. “We have to charge at a price which makes sense for our customers as well as shareholders.”

Kenyan inflation accelerated for the 11th consecutive month to 17.3 percent in September. The shilling is the world’s worst- performing currency against the dollar this year after falling 19 percent, making imports of goods including telecommunication equipment more expensive.

Safaricom shares fell 1.7 percent to 2.95 shillings ahead of the announcement, giving the company a market value of 118 billion shillings ($1.18 billion).

The increase in tariffs marks the first upward adjustment since a price war began in August 2010 when the telecommunications-industry regulator ordered mobile-phone operators to halve the rates they charge each other to transmit calls across networks. That triggered a round of reductions in call costs by companies to as low as 2 shillings per minute.

Subscribers Increase

The number of mobile-phone users in Kenya grew at the fastest pace in at least a year, rising 12 percent to 25 million, in the three months through December as the cost of calls fell, the Communications Commission of Kenya said June 8.

In June, President Mwai Kibaki ordered a halt to further cuts in call tariffs after companies including Safaricom and rival Telkom Kenya Ltd. opposed the reductions, Business Daily reported. Network charges had been expected to drop to 1.44 shillings at the beginning of July from 2.21 shillings, it said.

Safaricom is 40 percent-owned by Vodafone Plc, the world’s biggest mobile-phone operator. Its other competitors include Airtel Kenya Ltd., a unit of New Delhi-based Bharti Airtel Ltd. (BHARTI), and Essar Telecom Kenya Ltd.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.

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