• New decision is in alignment with global best practice and represents a further reduction to those made in 2017
• The move is expected to increase market competition and enhance telecoms service quality
RIYADH, 11 June 2020 – The Communications and Information Technology Commission (CITC) has announced it will lower the cap on termination rates for local mobile and fixed calls. Termination rates, which are the fees network providers charge one another for terminating calls originating outside their own networks, can lead to reduced competition among providers and increased costs for consumers.
Local Mobile Termination Rates (MTR) will be set at SAR 0.022, and Fixed Termination Rates (FTR) will be SAR 0.011, representing reductions of 60% and 48% respectively on previous rates, which were last cut in 2017.
The decision comes as a result of a thorough benchmark analysis conducted by the CITC into global averages and regulatory best practice for termination rates, as well as extensive consultations with Saudi Arabia’s five telecom operators.
The termination rates cap reduction is part of a wider drive to promote fair competition in the sector while encouraging the provision of reliable and affordable services. Similar initiatives aimed at enhancing competition in the telecoms sector include the tendering of new Mobile Virtual Network Operators licenses in January 2020, with MVNOs also expected to benefit from the reduction in termination fees.
His Excellency Dr. Mohammed Al-Tamimi, Governor of the CITC, said “The decision to further reduce termination rates will benefit consumers, operators, and investors alike, and is crucial to the strengthening of the Kingdom’s telecommunications ecosystem and competitive environment.”
The Kingdom’s ICT sector, valued at $28.7 billion, is the largest in the MENA region. The Ministry of Information and Communication Technology recently launched a five-year strategy to accelerate the ICT sector’s growth by 50% and increase its contribution to GDP by $13.3 billion.