Telecom charges plummet in price war

International telephone calls from the Somali capital, Mogadishu, which - at US $0.80 per minute - are among the cheapest in the world, are going down even further due to increased competition between the city's telecommunication companies.

New entrants to the market have proliferated, and this has reduced international call charges to as little as $0.25 per minutes.

The increase in the number of telephone companies operating in Mogadishu began at the end of last year. Earlier, the market had long been dominated by three companies: Barakaat Telecommunications, NationLink and the Somali Telecommunications Company, also known as Olympic. At the end of 2001, another company, Amana, started operations, followed within the last two months by Netexchange and TeleAtlantic, local sources told IRIN.

The current price war was started by Netexchange and TeleAtlantic this week, when they reduced their prices to $0.40 and $0.35 respectively per minute, they said.

Amana followed suit and reportedly reduced its overseas charges to $0.25, a local businessman, Dahir Haji Yusuf, told IRIN. He said the new companies were trying to break the stranglehold of "the big three" on the market.

However, Ahmad Abdi Dini, general manager of the NationLink, told IRIN that his company was not going to allow itself to be sucked into a price war.

"We are providing a quality service, and we will not compromise on this. Our customers are satisfied with what we do," he said.

Dahir said the new companies had very few land line customers, and depended heavily on "people walking into their premises to make their calls", which would make it impossible for them to make a dent in the market share of the big ones.

The new companies were unlikely to sustain their current prices, he added. "They think this will get them a share of the market, but I doubt if they will be able to sustain it for long and stay in business."

Prices would probably stabilise at the $0.80 rate the major companies were currently charging, he forecast.