Bring it on, says Kenya phone company

August 23, 2010
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, NAIROBI, Kenya, Aug 23 – Zain Kenya said on Monday that it expects to weather out competition in its quest to gain market leadership even as other operators begin to respond to the latest Communication Commission of Kenya (CCK) measures to lower call rates.

Zain Kenya Managing Director Rene Meza said that the operator expects to leverage on the experience of Bharti Airtel, its new shareholder, which brings on board a business model of low margins and high volume.

Mr Meza said Bharti brings with it experience and the financial muscle that will see it beat the competition as it changes its strategy to target the mass market.

“One thing our competition may not have is the ability to leverage on massive economies of scale that we are going to do with our new shareholders. But if we eventually have to respond to lower tariffs we will do it,” Mr Meza said.

His sentiments come barely a week after Essar Telecom’s Yu also announced a 50 percent slush of its cross network calls.

Safaricom, Zains biggest rival controlling an estimated 78 percent of the market, has also alluded to a new tariff structure later this week. In a teaser advertisement in the local dailies, Safaricom gave a snippet of its intentions saying ‘Masaa ya kubamba yanakuja’.

The Zain boss however reads little into that statement, saying they were ready to counter any tactics by Safaricom.

“It is part of our strategy going forward and we are ready for it,” he said.

The lowering of cross network tariffs follows a CCK decision to issue new guidelines that requires operators to lower their interconnection rates from Sh4.42 per minute to Sh2.21.

CCK’s intervention has already sparked off a price war among operators.

The war of words came into full glare last week when Zain accused Safaricom of failing to increase its capacity to accept calls from its network. Safaricom however rubbished those claims and blamed their competitors for poor planning.

Mr Meza on Monday said the situation had improved slightly saying “both teams are working very hard; we have not resolved it 100 percent but expect to sort it by the end of the week.”

Mr Meza said the response in the market had been great but said it was too early to start talking numbers. He however said a number of business partners had already started approaching Zain as it looks to double its distribution network in the next one year.

“Today we have strong network quality but that is not supported by the distribution network in the rural area and that is what we aim to improve,” he said.

Zain currently has 67 distributors and is looking to take the number up to 200.

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