Call rates drop further

October 15, 2008
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, NAIROBI, October 15 – Mobile phone subscribers are now emerging as the beneficiaries of the tariff wars among operators as the companies seek to remain competitive.

In a bid to keep up with increased competition, Safaricom on Wednesday announced new calling rates that will see its prepaid subscribers pay between Sh3 to Sh8 per minute for calls made within the network. The lowest communication rate in the market is Sh1 per minute by Telkom Kenya under its Orange brand.

Safaricom Chief Executive Officer Michael Joseph told a press briefing that through the offer dubbed ‘Jibambie’ customers can choose the rate that suits them by topping up with the different denominations of new scratch cards that had been introduced into the market.

“Each of the stractchcards will have a different per-minute rate.  For instance, if you buy an airtime voucher worth Sh1000, you will pay Sh3 per minute and send text messages for Sh2 to other Safaricom subscribers,” he explained.

Callers topping up with Sh500 will be entitled to call for Sh4 per minute while those purchasing the Sh250 and Sh100 will pay Sh5 and Sh6 respectively.

Responding to queries why callers purchasing lower denominations would have to pay more for their calls, Mr Joseph said the pricing was not unfair to low-income earners as they have also a reduced the overall tariff.

“Our prices are not discriminatory to those without much money because anyone who tops up with Sh20 or Sh50 will call at Sh8 and Sh7 respectively as opposed to Sh10,” he explained.

The CEO said the offer which runs for two months – and whose uptake response will be reviewed constantly – will primarily benefit majority of their 12 million customers who call within the network.

“Ninety five percent of our calls are made on our network so we feel that by concentrating on bringing on tariffs down on the on-net calls, we will benefit our subscribers,” he explained when asked why the company did not lower their off-net rates.

Customers calling other networks will pay Sh15 per minute while the lowest rate in the market is Sh8.

At the same time, Mr Joseph said they had not felt the impact of the aggressive marketing campaigns that have being carried out by their competitors.

He said Safaricom had recorded increased revenues and the number of subscribers joining the network in the last two weeks.

“There may be progress in the calling patterns but we haven’t seen any negative impact but we will release the figures on the revenue growth in the first week of November,” he added.

He disclosed that they would add more functionalities in their money transfer service M-Pesa, and expand their coverage to rural areas so as to maintain Safaricom’s position as the market leader. The firm currently commands 85 percent of the market share.

At the same time, one of its competitors Telkom Kenya has launched low cost handsets which it hopes will boost the mobile telephony penetration rates in the country. The offer will see customers purchase the Samsung B130 phone at Sh1,499.

“Recent mobile data indicates that by June 2008, there were 14.3 million subscribers or 39 percent mobile population penetration in Kenya. One of the main reasons given for low penetration is the relatively high cost of mobile handsets,” said Telkom Kenya CEO Dominique St Jean in a statement.

The announcement comes a week after Telkom which operates under the ‘Orange’ brand introduced a price cut offer of Sh1 for on-network calls made until December.

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