Kenya increased its excise duty on airtime and telephone services from 15% to 20% on 1 July, leaving mobile data and SMS charges unchanged. The market’s three largest players, Safaricom, Airtel and Telkom Kenya, have increased their prices as a result, while leaving the cost of their bundles of services unchanged.
The higher taxes are more likely to affect low-income earners as demand for airtime and data is highly inelastic, says Sarah Wanga, head of research at AIB Capital in Nairobi.
Kenyans are likely to respond by making greater use of bundles, where prices are unlikely to increase as much, she says. Bundles from Airtel and the third-largest player Telkom are cheaper, “but people prefer Safaricom because of the quality of the network,” Wanga says.