Kenya mobile phone operators in tiff

NAIROBI, Kenya, Aug 19 - A bitter competition war is unfolding between Kenya’s two largest mobile phone companies - Zain and Safaricom - over the handling of traffic across the two networks.

The dispute started with accusations from Zain that Safaricom was sabotaging its new price deal, by offering limited capacity for cross-network calls coming from the Zain network.

Barely a day after launching the country’s lowest cross network tariff at Sh3 a minute, Zain pointed an accusing finger to Safaricom saying it was ‘abusing dominance’ by not increasing its capacity to receive calls from the Zain network.

Zain even went a step further to write to industry regulator, the Communications Commission of Kenya (CCK) to step in and investigate the matter.

“Our customers are experiencing congestion and call set up issues when they call Safaricom and not when calling Zain. This is purely for the simple reason that our main competitor has been delaying the capacity increase request from our side to accommodate the incremental traffic coming from us after we launched our new offer in the market,” Zain Kenya Managing Director Rene Meza charged in a statement.

Mr Meza said despite having made requests to Safaricom, their competitor had remained uncooperative.

“We simply requested for a swap out of some circuits from the Safaricom to Zain link to the Zain to Safaricom link. In our experience, such a request can be accommodated in a matter of minutes and at no cost. Much to our surprise, we could not get a commitment from Safaricom as to when the configuration would take place,” he said. 

But in quick response, Safaricom faulted Zain for lack of proper planning as it only sent a formal request late on Wednesday.

“We must admit that we are quite surprised by the claims made by Zain that we are trying to stifle the delivery of their traffic to our network. These claims are quite insincere considering that Zain is fully aware of the procedures that all operators must adhere to when seeking to increase their inter-connect traffic capacity,” Safaricom Chief Executive Officer Michael Joseph said.

“Safaricom has now and in the past continued to adhere to the terms of the inter-connect agreements signed with all operators and wishes to urge other operators to do the same. We have always been ethical in the way we conduct our business and our integrity is the greatest pillar of our success in Kenya. We will however not take responsibility for the consequences of poor planning by other operators,” Mr Joseph added.

Safaricom has said it would continue with its “unflinching commitment to integrity” in all its operations including honouring the terms of agreements between it and its competitors.

“We have always been courteous to Zain, even to the extent of accommodating them when they were unable to clear the significant debt that they owed us. This notwithstanding, we shall continue to cooperate with them as guided by the inter-connect agreement and other industry rules. We invite them to engage us within those parameters,” Mr Joseph said.

The Communications Commission of Kenya has lowered interconnection rates from Sh4.42 to Sh2.21, effective September 1st. Zain became the first operator to take advantage of the new rates in an effort of driving up its subscriber base.

Bharti Airtel, the new owners of Zain, have not hidden their desire to clinch market leadership with the International Chief Executive Manoj Kohli even saying, “Bharti Airtel is about leadership. Whichever market we enter, we enter with a clear vision for leadership.”

Bharti aims to flex its muscle in the market with a well spelt out strategy with major focus on the lower-end of the market investing as much as Sh24 billion to upgrade its network.

BY MICHAEL KARANJA

Zain Kenya lowers call rates

NAIROBI, Kenya, Aug 18 – The Kenyan mobile telecommunications market has started witnessing the Indian business model of low margins and high volume, as Bharti Airtel announced drastic price cuts for subscribers on the Zain network.

Wednesday’s launch of a Sh3 flat call rate from Zain to all other networks is a clear testimony that the Indian mobile communications giant was aggressively targeting to recruit more subscribers to its network.

Zain Kenya Managing Director Rene Meza said the move forms part of the operator’s new business model targeting the mass market as well as making mobile services more accessible to subscribers.

“As we move forward with Airtel Kenya we are going to lead from the front by investing in all fronts in order to have one single focus as part of our business model - and that is our customers,” Mr Meza said.

Bharti has already curved a name for itself in India where it operates a mass-market model that is expected to be replicated in Kenya.

Mr Meza said part of the operator’s new strategy is to boost its volumes while leveraging on the strength of Bharti to make it the market leader in the telecommunications sector.

“At the moment our focus is our growth in revenues and subscribers. Margins and profits will come as we increase our customer base and leverage on the economies of scale in reducing our call structure as we go forward,” he said.

Zain becomes the first mobile operator to take advantage of the revised interconnection rates expected to take effect from September.

The Communications Commission of Kenya has lowered the rates from the current Sh4.42 to Sh2.21. The reduction of the tariffs is likely to lead to vicious price wars in the market as operators look to position themselves but Mr Meza believes it will also give smaller operators room to grow.

Safaricom, with 78 percent of the 20 million subscribers in Kenya, has come under pressure from other operators due to the high interconnection rates that have made it costly to call across networks.

In response to Zain’s latest move Safaricom Chief Executive Officer Michael Joseph said they would be reviewing their own call structure in due course.

Mr Joseph was however quick to point out that it was important to price services in a way that guarantees returns. He is of the opinion that an operator cannot price services at below cost to make margins.

“What Bharti have said and proved is that they believe you can lower your price and you will get huge volume that will give you the high revenue and profit that you need. I however, am of the opinion that there is not that much huge volume per subscriber in terms of minutes but we will see. We each have our own strategies and we will play it out,” Mr Joseph said.

Bharti has been seen to be taking the fight to Safaricom with plans to invest Sh12 billion to grow its network and distribution system to give it presence in the country. This has since been revised upwards to Sh24 billion to cover expansion as well 3G roll out.

“Bharti is fully aware that today the level of profit is not on the positive side but at the same time they also understand that if you don’t invest in what is required of the business the net profits will not get any better either,” Mr Meza said adding the journey to the top will be long and challenging.

BY MICHAEL KARANJA

Reach for Kenya mobile TV to expand

NAIROBI, Kenya, Aug 13 - DSTV Mobile plans to expand its network to cover Kisumu, Nakuru and Eldoret by next year.

The service which offers satellite television on mobile handsets currently covers Nairobi and Mombasa only.

Digital Mobile Television (DMTV) - a subsidiary of MultiChoice - which runs the service, says it is conducting consumer research to establish what content and pricing module would be most suitable

 “We are targeting the mass market and it will be important for us to find out how customers have taken to it so far,” DMTV General Manager Felix Kyengo said on Friday.

He added that with the changes in technology consumption of television was becoming increasingly personal with consumer convenience playing a central role.

This has seen broadcasters go out of their way to find new ways through which consumers can access their preferred content on the move.

DSTV Mobile currently offers 14 channels on its bouquets including Channel O, SuperSport7, SuperSport3, Cartoon Network, Africa Magic, BBC, CNN and the current Big Brother Show.

Mr Kyengo said the 2010 FIFA World Cup played a major role in pushing up its customer numbers, but was not at liberty to disclose the actual number of subscribers.

“During the World Cup we had a major breakthrough with many people coming on board and we expect with the start of the English Premier League that our numbers will go even higher,” he said.

DSTV Mobile is currently available on selected Nokia and ZTE handsets but Mr Kyengo expects this to change in the coming months.

“As the concept catches on in Kenya you will get more mobile manufactures coming up with compatible phones,” he said.

He was speaking during the signing of an agreement with mobile network Yu to make its content accessible to Yu subscribers.

The network becomes fourth operator to offer mobile DSTV content, a move Essar Telecom Country Manager Atul Chaturvedi believes will help it grow in the Kenyan market.

“This is a competitive market and a partnership with relevant industry players is a key aspect for us to be able to provide innovative services to our subscribers.  We will relentlessly continue to pursue ways of stretching our reach to more and more customers by providing new and exciting packages targeting various market segments,” Mr Chaturvedi said.

BY MICHAEL KARANJA