Håvar Bauck

Mobile warfare in Kenya

Breakneck competition between Kenya’s mobile operators

Whenever a text message pops  in these days, I pray it is not more spam from the operator. Too often, it is.

Safaricom and Zain seem to have gone crazy with their sms advertizing, and there is no way to stop them! I have no idea what Yu and Orange are up to, but I doubt they are any better.

Mobile wars in Kenya have reached feverish temperatures, to the benefit, but also to the nuisance of the users. Sure, I’m thrilled that calling rates are coming down, but do they really have to send me messages about it every day?

Seemingly irresistible offers like “top up now, and get 100% bonus airtime” have been filling up message inboxes across the country for a while now. Of course, these offers are tricks with little real value, as the bonus airtime expires after a few days, and can only be used within the same network, or other limitations making the offer virually useless.  I spent 3,5 years setting up and advertizing such promotions, as VP Sales Africa in Vyke Communications, so I am only too familiar with the real value of such offers!

Customers aren’t stupid, though. Although people at first get impressed by such offers, they quickly see through them. The problem is that once all the providers start doing it, everyone gets caught up in a viscious cycle that it’s hard to break out from. Therefore, I expect the daily sms spam about “fantastic offers” and chances to “win millions” to continue for the foreseeable future.

The good news is that behind the facades of “fabulous” promotions, there is a significant real drop in calling rates as well. Finally, Kenyans are seeing the effects of the increase from 2 to 4 mobile operators! The ongoing teeth-and-claws competition is good news for the users after all, as calling rates have dropped radically. On Zain, intra-network calls are down to KSh 1 (€ 0,01), and KSh 3 €0,03) to other networks.

What I really love, though, is the crazy drop in international calling rates (of which I am also being reminded almost daily by SMS).  USA, Canada, India and China is down to KSh 3 (€0,03) per minute on Zain, and no international destination costs more than KSh 30 (€0,3).

The other operators are likely to follow suit soon, and most likely rates on international calls will come even further down. In a development that has swept across the African continent, most mobile operators have dropped their charges on international calls down to flat rates of €0,15-€0,2.

During my time as VP Sales Africa in Vyke Communications, it was always a worst-case scenario materializing whenever that development spread to more African countries, as our business was based on providing international calls at lower rates than the mobile operators. Of course, that development was unstoppable across the continent, as liberalization, deregulation and tough competition became the mantras of every African government but a few.

Kenya is finally catching up on this development, and I expect international calls to be between KSh 15 and KSh 20 on all mobile operators within a year.

As the costs of mobile calls are being pushed downwards and margins are dropping, operators are still milking the market on internet connectivity, and that’s where I hope to see the next price war.

My other hope is that Zain and Safaricom will someday soon stop spamming me with text messages about their “amazing” promotions!

Categories:   Business, Technology

  • Linda

    I like your article en would like you to give me alittle insight on the effects of these price wars among mobile operators on small,micro en medium enterprises