UPDATE 1-Kenya telecoms regulator cuts mobile connection rates

Mon Nov 26, 2012 11:03am EST

* Warns against uncompetitive behaviour

* Further cuts expected next year, 2014 (Adds details, background)

NAIROBI Nov 26 (Reuters) - Kenya's telecoms regulator cut the rate mobile phone operators charge each other for calls made across networks by 35 percent, its director said, warning firms against using the reduction to undercut others by lowering tariffs steeply.

Francis Wangusi, director general of the Communications Commission of Kenya (CCK), said on Monday it had cut the rate to 1.44 shillings per minute from 2.21 shillings, backdating it to July 1 this year.

He said the regulator planned to further reduce the rate to 1.15 shillings in July 2013 and to 0.99 shillings a year later.

"We're very keen to punish any uncompetitive behaviours. Any competitors that think they can use this to undercut others will be punished," he told a news conference.

India's Bharti Airtel triggered a price war in 2010 when its Kenyan unit slashed tariffs by more than half to entice users from market leader Safaricom.

An executive at a telecoms company who did not wish to be named told Reuters operators could increase revenues if none of them initiated a price cut competition.

Other operators in the country are Telkom Kenya, controlled by France Telecom and Essar Telecom, operating as "Yu".

The telecoms industry is among the fastest growing in the east African economy of 40 million people, of whom 29.7 million had mobile phones as of October, CCK data showed. (Reporting by Kevin Mwanza and Duncan Miriri; Editing by George Obulutsa and Helen Massy-Beresford)

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