Safaricom ready for competition in Kenya

July 21, 2010

, NAIROBI, Kenya, Jul 21- Safaricom says it is going to leverage on knowledge of the local market to ward off competition from other service providers.

Safaricom Chief Executive Officer Michael Joseph on Wednesday acknowledged increasing competition in the market but said they are not going to be drawn into vicious marketing gimmicks to retain their lead.

His sentiments come barely three weeks after new entrant Bharti vowed to become the leading operator within the next three years.

“We can’t pretend that we don’t have a new offering coming in from Bharti very soon. But we have withstood the two companies that have come before them promising to eat our lunch and never did,” Mr Joseph said.

He added that Safaricom was in a unique position to maintain a sizeable share of the market.

Mr Joseph is however resigned to the fact that there is going to be a slight erosion of its market share with the entry of more players into the sector.

Nevertheless, the man at the helm of the region’s most profitable company said the focus would be on retaining its high revenue earnings by giving consumers services they need.

“Of course, our 78 percent market share by SIM numbers will decline; it is a mathematical certainty. What is important for us is to maintain our market share by revenue which is more important,” he said.

In its 2009 financial year, Safaricom’s revenues grew by 19.1 percent to Sh83.9 billion from a previous Sh70.4 billion. The growth was mainly driven by a 137.6 percent jump in data revenues as it looks to reduce its dependency on voice revenue alone.

Bharti has announced plans to pump Sh12 billion in a bid to push the Airtel brand to the rural areas signaling a battle based on pricing for subscribers.
Airtel will be looking to increase its market share by focusing on rural areas and lowering communication costs.

One way Safaricom will look to maintain its lead in the market will be by capitalising on its flagship money transfer service, M-Pesa.

Since its introduction three years ago the service has moved Sh300 billion. Some utility companies have also teamed up with the service to offer convenience in paying bills.

So far, Safaricom has enlisted 300 organisations to settle bills. The latest company to partner with Safaricom is satelitte TV company DSTV, allowing customers to pay their subscription via M-Pesa.

Speaking during the signing of the agreement, Multichoice Kenya General Manager Stephen Isaboke said the service would have a two hour turnaround time allowing subscribers to continue enjoying their viewing.

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