Orange, as expected, finally announced a new low call rate of Kes. 2.00 per minute for Orange and Telkom Fixed calls. In addition, Orange also has a new low SMS rate of Kes. 1.00 for on-net messages. Lastly, Orange is offering FREE calls from 10.00 am to 5.00 pm on the Orange network for a fixed daily rate of Kes. 100.00 which is quite impressive by all measures.
So there you have it – we are in the middle of a full-scale mobile tariff war in Kenya and the irony is that there is no clear winner as all operator rates have now hit rock bottom. At the end of the day, its the subscribers who are winning, or so it seems? However, what I would really like to see is the same sort of aggressive price cuts for Internet services – this would really make things interesting as they are way too high at the moment.
What a week its been in Kenya’s mobile networks sector! So much has happened in such a short space of time. It all started on Monday this week when the Communications Commission of Kenya (CCK) announced a 50% price reduction on mobile network interconnection rates from Kes. 4.42 to Kes. 2.21. This action in turn led to Zain immediately lowering their call and SMS rates dramatically as reported on this blog thereafter.
Zain’s new low tariffs triggered a stampede of new cutsomers and as such its interconnection to Safaricom clogged up, leading to poor service. Zain then proceeded to blame Safaricom as the “dominant” mobile network for not upgrading their interconnection capacity in-time so as to accommodate the deluge of new customers signing up. Safaricom in turn noted that Zain had failed to inform them in good time to upgrade their interconnection capacity which they said pointed to Zain’s bad planning and ulterior motives.
As all of this drama unfolded, YU announced new call rates of Kes. 3.00 and SMS rates of Kes. 0.50 yesterday (YU’s SMS rates are half those of Zain). In the final analysis, we are clearly in the throes of yet another mobile tariffs war. However, no word yet on how Safaricom and Orange will respond to these new developments. One thing is for sure, Safaricom will definitely come back with something big, especially considering they still hold 80% market share in Kenya.
In two full page ads in today’s editions of the Daily Nation and the East African Standard, Zain has announced unprecedented low and permanent tariffs for both mobile calls and SMS messages to ALL networks in Kenya.
In a move that is clearly geared towards wooing a large number of subscribers from market leaders Safaricom, Zain has announced a new low tariffs of Kes. 3.00 to call any mobile network in Kenya as well as Kes. 1.00 per SMS message sent to any mobile network in Kenya.
This confirms that Bharti Airtel’s influence is starting to take shape at Zain since it was recently acquired with the rest of its African operations. Bharti Airtel is well known for having a low-cost and high volume business model that has made it extremely popular and successful in India.
In particular, the full page ads today have a clincher at the bottom showing that they are clearly targeting Safaricom by stating that “going green is not always the better option”. In addition, the ads also indicate that there are no terms and conditions attached to the new tariffs and that these are indeed permanent.
Going forward, what remains to be seen is how Safaricom and the other mobile networks in Kenya will respond to these new low-cost tariffs. However, in concluding, what can be expected is that revenues will most probably take a hit for all of them as they will have to match or lower the new tariffs to retain their customers. So, let mobile tariff wars begin afresh!
Below is an 18 minute video that I had meant to upload a week ago but it proved to be a challenge at the time. Finally though, its up! Its a complete clip of the briefing made to Kenyan Media by Manoj Kholi of Bharti Airtel and Airtel Kenya of their plans for this market. Its also my second uploaded video from the event where Naushad Merali also spoke briefly and that video is also on this blog. Enjoy the same:
In the news this week, Bharti Airtel which recently acquired 15 African operations of Zain including Kenya for over US$ 10 Billion reiterated that it will seek to empower local operations by developing its local human capital as part of its business strategy. This news comes after various reports last week that had indicated that Bharti Airtel had intended to bring large numbers of senior management staff from its Asian operations that was sending jitters through the Zain Africa workforce.
The proposed approach to how Zain Africa local operations would be handled was communicated by Bharti Airtel’s CEO, Manoj Kohli, during the mobile company’s Africa leadership workshop held in Kampala between the Bharti’s executives and 15 country Managing Directors over this past weekend. Speaking about the workshop, Mr. Rene Meza, Managing Director, Zain Kenya said that the joint meeting provided an opportunity for the business leaders to share each market’s vision and strategy.
“This week, the senior management team from Zain Africa and Bharti came together to jointly set out the vision and strategy for Airtel Africa as ‘one team’. One thing that has clearly emerged from this meeting is that Airtel’s operations in each market, including Kenya, will be further empowered to be truly local businesses, and therefore our existing employees are critical to achieving this vision. “Airtel is a highly professional, innovative and successful business, and we are all set to benefit from the transfer of knowledge and skills into our business, and we welcome that” He added.
During the meeting, it was agreed that a small core team of 40 Bharti Airtel employees with specialized expertise, will be deployed across all 15 countries of Africa which will continue employing a total of 6,500 employees. 20 out of these 40 will be stationed in an all new, 100-employee Africa Headquarters which will be based in Nairobi. In addition to Airtel Africa Head office in Nairobi, all its strategic partners are planning to set up new offices or expand existing offices in Nairobi. Equally, in the next six months, 20 professionals from across its 15 African operations will be inducted by Bharti to its operations in India as part of its talent cross pollination program.
This is probably the biggest news in Kenya’s telecoms sector after Safaricom’s stunning financial results from last week. According to various online news sources, Zain Kenya is on track to secure a license for 3G services by July 2010. This comes on the back of an announcement from Zain Kenya’s CEO Rene Meza who says that the Communications Commission of Kenya (CCK) has agreed to (finally!) lower 3G license fees from the current astronomical US$ 25 Million to a significantly less expensive price. If this is indeed true then the CCK should be announcing the new 3G license rates sometime this week according to media reports.
Zain Kenya is currently Kenya’s second largest mobile network with around 2 million users. Currently, Zain only offers 2.5 G services and as such are unable to compete effectively with Safaricom’s 3G service. In addition, neither YU or Orange Kenya have 3G as well and we are yet to hear what their reactions will be to this latest announcement. One thing is certain, mobile data is fast becoming a linchpin for Safaricom’s superior business performance for both retail and business customer segments. It will be interesting to see if Zain Kenya can match or better Safaricom’s 3G pricing going forward as this has been quite expensive for most users to-date. Whatever the case, its been a long time coming but finally 3G will be more widespread in Kenya.
In light of Zain Kenya going 3G, and presumably the same will happen with YU and Orange Kenya in due course, what remains to be seen is how Safaricom will respond. Incidentally, Safaricom have already announced that they plan to start testing 4G services later this year on their network. At this juncture as it stands, the CCK has not yet published the new reduced 3G license pricing, leave alone 4G so Safaricom is clearly well ahead of the market. 4G is also known as Long-Term Evolution (LTE) and typically allows users to upload and download movies, music and data to their mobile devices far quicker than 3G or 2G.
In the media this past week, Zain Kenya has launched “Jikonnect”, a range of low-cost (and apparently permanent) tariffs for voice calls on and off their network. The way Jikonnect works is that on-network calls between the hours of 6.00 pm and 6.00 am are only Kes. 3.00 per minute whereas off-network calls to other mobile networks in Kenya are Kes. 6.00 per minute at the same timings.
Jikonnect is being cited as part of Zain Kenya’s strategy to capitalize on a low-cost but high volume model that recent acquirer Bharti Airtel has had lots of success with in India. Undoubtedly, this is going to lead to yet another mobile telecoms price war as each of the 4 mobile networks tries to retain and grow market share but invariably usually results in lower Average Revenue Per User (ARPU).
In an earlier post on this blog a couple of months ago, I had expressed my dissatisfaction that all the mobile operators in Kenya seemed to be launching “me too” Internet services in the marketplace which had almost identical features and lacked creativity that was market-driven. Therefore, it came as a pleasant surprise this past week when Zain Kenya launched some new and highly flexible unlimited and limited usage Internet bundles that buck this trend.
If this is a precursor to some of the changes we can expect when Bharti Airtel’s US$ 10.7 Billion acquisition of Zain Africa takes full effect then we are already seeing some creativity that could tip market share balances as they stand today. To note though is that Zain Kenya still does not have a 3G service in place and therefore they only offer speeds within GPRS and EDGE (collectively known as 2.5G).
The reason why Zain Kenya, Orange Kenya and YU mobile networks do NOT yet have 3G unlike Safaricom is that none of them are willing pay the exhorbitant US$ 25 Million that is required to secure a 3G license from the Communications Commission of Kenya (CCK). This has become a major bone of contention in the rapid proliferation of broadband Internet connectivity throughout Kenya as CCK has so far refused to lower it since Safaricom made the payment a few year ago – only time will tell how this pans out.
Below are the new Zain Kenya internet bundle rates as published in Kenyan media:
Unlimited Prepaid Internet Bundles.
Unlimited 1 day @ Kes. 250.00
Unlimited 10 days @ Kes. 1,250.00
Unlimited 20 days @ Kes. 2,250.00
Unlimited 30 days @ 3,250.00
Prepaid Internet Bundles.
25 MB @ Kes. 100.00
70 MB @ Kes. 250.00
150 MB @ Kes. 500.00
500 MB @ Kes. 1,250.00
1 GB @ Kes. 1,750
In addition to the above bundle rates, the pay as you go Internet usage rate is Kes. 7.00 per megabyte. Finally, the modem cost is still Kes. 2,010.00 as announced late last year and comes with 150 MB of data free usage.
In the news this week, Zain and Housing Finance have announced a strategic partnership based on the Zain’s Zap mobile money service. The partnership will enable Zain Zap users to deposit and withdraw mobile money at any of Housing Finance’s 10 branches in Kenya. At the same time, Housing Finance will also provide agency banking services with Zap. This service is quite similar to a recent partnership that was also announced by Equity Bank and Safaricom that would enable Safaricom’s M-Pesa mobile money users to withdraw money from Equity Bank’s automated teller machines (ATM’s).
The last couple of weeks have been quite busy with travel and work so I’ve literally had no time to blog (shame!). On the travel side, I was in South Africa’s Johannesburg City last week for the inaugural Mobile Web Africa Conference which was a real eye opener for me (I’ll be blogging more on this event over the weekend for a full round up of what was interesting there).
So, just to get the weekend going, there are two really interesting developments in Kenya’s ICT landscape this week. The first is that Kenya Data Networks or KDN as they are popularly known have announced this week that they are quadrupling bandwidth to their clients for the same price. This is really interesting since a couple of months back both AccessKenya and UUNET had doubled bandwidth to their clients for the same price but KDN as effectively gone a step further and they are bound to unleash a bandwidth war of sorts. At the end of the day, what remains to be seen is if the other players in the marketplace follow suit and we can finally have the benefit of much faster bandwidth at lower prices since the SEACOM and TEAMS undersea cables went live.
In other news this week and what is clearly a counter move to Safaricom’s M-Pesa and Zain’s Zap money transfer services, Kenya Commercial Bank (KCB) is set to launch a mobile wallet service early next year. The service from KCB is interesting in that one does NOT have to be a KCB customer to access the service and will only require a mobile phone on any of the Kenyan mobile networks (initially). The other interesting aspect of the KCB mobile wallet is that it will be available not only in Kenya but also in all the countries where KCB currently operates including Tanzania, Uganda and Southern Sudan.
The KCB mobile wallet will also interface with Safaricom’s M-Pesa service meaning that users will be able to top-up or withdraw funds from their M-Pesa accounts to their KCB mobile wallets and vice versa. Finally, the limit for money transfers using the KCB mobile wallet will be Kes. 100,000.00 which is higher than the limits currently offered on Zain’s Zap and Safaricom’s M-Pesa services. In a nutshell, KCB is proving that its not only the largest bank in Kenya but possibly the most innovative too by fully embracing the mobile money channel instead of fighting it!
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