Kenya mobile phone operators in tiff

August 19, 2010
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, NAIROBI, Kenya, Aug 19 – A bitter competition war is unfolding between Kenya’s two largest mobile phone companies – Zain and Safaricom – over the handling of traffic across the two networks.

The dispute started with accusations from Zain that Safaricom was sabotaging its new price deal, by offering limited capacity for cross-network calls coming from the Zain network.

Barely a day after launching the country’s lowest cross network tariff at Sh3 a minute, Zain pointed an accusing finger to Safaricom saying it was ‘abusing dominance’ by not increasing its capacity to receive calls from the Zain network.

Zain even went a step further to write to industry regulator, the Communications Commission of Kenya (CCK) to step in and investigate the matter.

“Our customers are experiencing congestion and call set up issues when they call Safaricom and not when calling Zain. This is purely for the simple reason that our main competitor has been delaying the capacity increase request from our side to accommodate the incremental traffic coming from us after we launched our new offer in the market,” Zain Kenya Managing Director Rene Meza charged in a statement.

Mr Meza said despite having made requests to Safaricom, their competitor had remained uncooperative.

“We simply requested for a swap out of some circuits from the Safaricom to Zain link to the Zain to Safaricom link. In our experience, such a request can be accommodated in a matter of minutes and at no cost. Much to our surprise, we could not get a commitment from Safaricom as to when the configuration would take place,” he said. 

But in quick response, Safaricom faulted Zain for lack of proper planning as it only sent a formal request late on Wednesday.

“We must admit that we are quite surprised by the claims made by Zain that we are trying to stifle the delivery of their traffic to our network. These claims are quite insincere considering that Zain is fully aware of the procedures that all operators must adhere to when seeking to increase their inter-connect traffic capacity,” Safaricom Chief Executive Officer Michael Joseph said.

“Safaricom has now and in the past continued to adhere to the terms of the inter-connect agreements signed with all operators and wishes to urge other operators to do the same. We have always been ethical in the way we conduct our business and our integrity is the greatest pillar of our success in Kenya. We will however not take responsibility for the consequences of poor planning by other operators,” Mr Joseph added.

Safaricom has said it would continue with its “unflinching commitment to integrity” in all its operations including honouring the terms of agreements between it and its competitors.

“We have always been courteous to Zain, even to the extent of accommodating them when they were unable to clear the significant debt that they owed us. This notwithstanding, we shall continue to cooperate with them as guided by the inter-connect agreement and other industry rules. We invite them to engage us within those parameters,” Mr Joseph said.

The Communications Commission of Kenya has lowered interconnection rates from Sh4.42 to Sh2.21, effective September 1st. Zain became the first operator to take advantage of the new rates in an effort of driving up its subscriber base.

Bharti Airtel, the new owners of Zain, have not hidden their desire to clinch market leadership with the International Chief Executive Manoj Kohli even saying, “Bharti Airtel is about leadership. Whichever market we enter, we enter with a clear vision for leadership.”

Bharti aims to flex its muscle in the market with a well spelt out strategy with major focus on the lower-end of the market investing as much as Sh24 billion to upgrade its network.

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