Safaricom rolls up sleeves for battle

September 30, 2010

, NAIROBI, Kenya Sep 30 – Safaricom has rolled up its sleeves to battle with competing mobile phone companies, in light of the recent price wars where calling rates and SMS charges have reduced drastically amongst all players.

Chief Executive Officer Michael Joseph said the situation in the market had moved from merely focusing on pricing for calls but a battle for dominance in the mobile industry.

"It is not really a price war; it\’s a total war, which Safaricom intends to win not by an inch, or a foot but by a long mile," Mr Joseph said.

Safaricom\’s dominance in the mobile industry has come under pressure by the entrance of Bharti Airtel, Zain Africa\’s new shareholders, who have made it clear they are out to attain leadership in the next three to four years.

The Communications Commission of Kenya\’s (CCK) decision to issue new guidelines that require operators to lower their interconnection rates from Sh4.42 per minute to the current Sh2.21 sparked a bitter price war that saw mobile operators reduce calling rates to as low as Sh1 to woo new subscribers.

However, Mr Joseph said Safaricom would strive to remain as market leader in the data segment, with its money transfer service M-Pesa remaining its most formidable weapon.

"M-Pesa has become more than just a marketing tool for us but in providing services to our subscribers conveniently," he said.

Close to 300 companies have partnered with Safarciom to settle bills via M-Pesa and Mr Joseph revealed that they were in talks with the Central Bank of Kenya (CBK) for permission to increase the money transfer limits on M-Pesa, which is currently capped at Sh35,000 per transaction.

"We want to take the maximum amount you can transact to Sh50,000 and also lower the minimum amount, but all that is subject to CBK approval," he said without giving a clear timeline on when that would happen.

Adoption of mobile banking has been taking root in the country as it is seen to speed up access to financial services and reach the un-banked population.

In May, Safaricom and Equity Bank launched M-Kesho a mobile banking service that has so far opened up over 658,057 M-Kesho accounts helping to mobilise over Sh177.8 million in new deposits. The partnership has also seen M-Pesa subscribers grow to 13 million.

"We are moving close to €150 million (Sh16.5 billion) a day, that\’s an incredible amount of money. We are moving more money in a month than what Western Union does," he said.

He was speaking during the signing of a partnership with Sarova Hotels offering guests the option of settling bills through M-Pesa. This makes Sarova the first hotel chain to implement m-commerce in its operations.

Guests will be allowed two maximum transactions a day meaning they can pay a maximum of Sh70,000.


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