Fitch: China's Telco Rate Changes Will Not Reduce China Mobile's Dominance:

Fitch Ratings says that China's latest cut in mobile interconnection rates will be insufficient to achieve its goal of creating a level playing field by redistributing profits from China Mobile to smaller operators.

Fitch believes that China Mobile will retain its strong market leadership position as we estimate that the proposed changes will reduce EBITDA by just 3%. The EBITDA of the second-largest operator, China Telecom, will likely rise by 3%. The ratings agency believes these changes in themselves will not be material to the companies' market positions and credit ratings, although China Mobile's ratings headroom will be reduced.

With effect from 1 January 2014, the mobile interconnection rate that China Telecom and third-largest operator China Unicom pay to China Mobile for most calls will be reduced to CNY0.04/minute. However, the rate that China Mobile pays to China Telecom and China Unicom will be maintained at CNY0.06/minute. In addition, the settlement rates for SMS and MMS would also be reduce to CNY0.01/message and CNY0.05/message respectively.

Fitch expects competition to partially offset the potential benefits to China Telecom and China Unicom, and put further pressure on China Mobile's profitability. The cut in the mobile interconnection rate payable by China Telecom and China Unicom will lower their average cost for voice traffic and may lure them to reduce tariffs to gain market share. In 1H13, the average mobile voice revenue per minute for China Telecom was CNY0.10, and CNY0.08 for China Mobile. However, Fitch does not expect a price war, as China Telecom and China Unicom focus more on mobile data than the traditional voice business.

Kenya: mobile subscriptions up, but voice traffic declines:

Kenya’s regulator says mobile penetration in the country has passed 77 percent, but voice traffic is declining.

In their latest statistics for the communications and postal sector to end June this year, CCK says the level of mobile telephony penetration registered an increase of 2.3 per cent to stand at 77.3 percent (30.5 million subscriptions), up from the previous quarter which recorded a penetration of 75.6 per cent (29.8 million subscriptions). 19.6 million people access the internet mainly through mobile phones, and SMS and instant messaging have contributed to the decline in voice traffic.

Total local mobile traffic declined by 1.1 per cent, recording a total of 7.1 billion minutes compared to 7.18 billion in the previous quarter. The overall mobile voice traffic per subscriber dropped from 81.1minutes recorded in the previous quarter to 78.4 minutes. Conversely, the total number of SMS stood at 4.3 billion up from 4.0 billion posted in the preceding quarter; averaging 47 SMS per subscriber, per month.

Mobile money transfer subscriptions increased from 23.2 million in the previous quarter to 24.8 million in the quarter under review, recording a 6.8 per cent growth, consistent with the positive subscriber growth patterns.

Comparing the Financial Years 2012/13 and 2011/12 the number of mobile money transfer subscriptions rose by 27.3 per cent overall. Similarly, the number of mobile money transfer agents grew significantly to record 88,466 agents during the quarter up from 74,216 registered during the previous quarter, representing a growth of 19.2 per cent. 

Kenya: mobile subscriptions up, but voice traffic declines:

Kenya’s regulator says mobile penetration in the country has passed 77 percent, but voice traffic is declining.

In their latest statistics for the communications and postal sector to end June this year, CCK says the level of mobile telephony penetration registered an increase of 2.3 per cent to stand at 77.3 percent (30.5 million subscriptions), up from the previous quarter which recorded a penetration of 75.6 per cent (29.8 million subscriptions). 19.6 million people access the internet mainly through mobile phones, and SMS and instant messaging have contributed to the decline in voice traffic.

Total local mobile traffic declined by 1.1 per cent, recording a total of 7.1 billion minutes compared to 7.18 billion in the previous quarter. The overall mobile voice traffic per subscriber dropped from 81.1minutes recorded in the previous quarter to 78.4 minutes. Conversely, the total number of SMS stood at 4.3 billion up from 4.0 billion posted in the preceding quarter; averaging 47 SMS per subscriber, per month.

Mobile money transfer subscriptions increased from 23.2 million in the previous quarter to 24.8 million in the quarter under review, recording a 6.8 per cent growth, consistent with the positive subscriber growth patterns.

Comparing the Financial Years 2012/13 and 2011/12 the number of mobile money transfer subscriptions rose by 27.3 per cent overall. Similarly, the number of mobile money transfer agents grew significantly to record 88,466 agents during the quarter up from 74,216 registered during the previous quarter, representing a growth of 19.2 per cent.