Kenya mobile phone firm to go mass market

June 2, 2010
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, NAIROBI, Kenya Jun 2 – The planned entry of Indian Telecom giant Bharti Airtel in Kenya is set to cause a stir in the mass-market mobile telephony segment.

Bharti, which is expected to buy out Zain’s African operations in a $10.7 billion deal, operates a mass-market model in India that is expected to be replicated in Kenya.

Already, Zain Kenya has set the platform for the operator by introducing new tariffs targeting the low-end customers after years of concentrating on corporate clients.

Speaking to Capital Business Zain Kenya Managing Director Rene Meza said negotiations on the ongoing sale have indicated Bharti’s intent to capitalise on its low-end strategy in an effort to grow Zain’s 17 percent market share.

“With the transition going on between Zain Africa and Bharti obviously we changed our approach for the Kenyan market and decided to go more aggressively for the mass market and we focus more on affordability for customers,” Mr Meza said.

He said Zain would be banking on its stronger network and wide reach to attract more customers through lower tariffs and attractive offers to grow market share.

In line with its new approach Zain Kenya plans to invest Sh3 billion to expand its coverage especially in the rural areas, where it eyes a lot of opportunity.

“Although we cover 90 percent of the population we still need to invest more on voice and expand our coverage to about 95 percent by the end of the year,” he said.

Zain intends to take the fight to Safaricom in the mobile commerce segment with plans to invest a further Sh350 million on its Zap money transfer service.

The investment will go towards increasing its Zap agents from the current 1,700 to 10,000 by the end of the year to give it better visibility among customers.

“The challenge for us has been the ability for our customers to reach our agents at their convenience and this will help us respond to their needs wherever they are through out the country, he said.

In its 2009 financial year, Safaricom raked in Sh7.5 billion from M-PESA highlighting the potential of money transfer if readily and easily available.

Data is another area the second largest mobile operator is looking to grow its revenue. It currently contributes 15 percent of Zain’s total revenue and has been growing by 30 percent on a yearly basis.

Zain intends to roll out third generation (3G) services in July in anticipation of slashing of the spectrum cost by Communications Commission of Kenya. 

“We expect CCK to announce the new costs in the first week of June and expect it to roll it out by July,” he said.

The service will be rolled out in Nairobi and Mombasa with plans to take it countrywide in the fourth quarter of the year.
 

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