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Zain introduces low-cost vouchers as price war intensifies

September 3, 2010 • Mobile and Telecoms

AFTER reducing its calling rate by 50% just a fortnight ago, Zain Kenya, the second largest mobile telephony operator in Kenya, has introduced Sh5 and Sh10 denomination airtime vouchers to the market.

Zain Kenya Managing Director Rene Meza said the move was aimed at complementing its recent 50% reduction on call charges.

“We are offering a wide range of scratch card denominations to suit the needs of all individuals. Access to telecommunication services is no longer a luxury but an integral part of each Kenyan’s socio-economic needs,” said Meza.

Meza said the lowering of tariffs was only the first ace up Zain’s sleeve, adding that the operator would be able to match any move its competitors made.

The Kenyan mobile telephony industry is currently experiencing cutthroat competition, with networks introducing various incentives to lure customers.

According to the Communications Commission of Kenya’s latest statistics, Zain was closing in on the two million-subscriber mark.

Zain becomes the second operator to introduce the Sh5 and Sh10 vouchers after Safaricom made a similar move in November 2009.

“We would like to enable our subscribers to enjoy our new low calling rates without hindrance. The low denomination scratch cards that we have introduced onto the market underpin our continued commitment to make access to telecommunication services in Kenya more affordable,” he said.

Meza said Zain Kenya would continue enriching the customer experience through providing affordable and flexible services in line with changing market needs.

“We are very happy with the way the Kenyan market has received our new approach to business. We are confident that we will be able to reclaim a significant portion of the market share as we pursue our goal of attaining market leadership,” he said.

He revealed that Zain had embarked on an upgrading programme for its infrastructure to cope with growing call traffic.

Last month Bharti Airtel announced that it had released Sh24 billion in capital investment into the Kenyan operation following acquisition of the company.

BRIAN ADERO in Nairobi, Kenya

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3 Responses to Zain introduces low-cost vouchers as price war intensifies

  1. It has indeed been a Powerful Price cum Media Blitzkrieg which has surely resonated beyond Kenya’s borders into other parts of SSA where Zain has its Franchise and probably not an unintended Consequence. The Media Campaign has been an Insurgent One and noteworthy for that.
    However, picking through the Numbers, I find myself not a little intrigued. Bharti announced their SSA Capex was $800m. Therefore, by announcing 24b Shillings for Kenya, there are effectively betting 37.5% of their Capex Spend on kenya? By all Accounts, between 60-80% of Zain’s calls terminate on Safaricom [clearly this price War is designed to disrupt that Dynamic] and therefore Zain are paying away 2.22 of their 3.00 Shillings. Factor in Agent Commissions and Tax and no less than 60% of Voice Calls are therefore a Net Bleed. The Longevity of such a Strategy is surely in doubt. The Rug was pulled from under Zain Kenya by its Kuwaiti Owners the last time such a Strategy was tried and at great Expense just shy of $30m and then the Price structure was higher.

    It makes the Space very intriguing indeed.

    Aly-Khan Satchu
    http://www.rich.co.ke
    Nairobi

  2. Someone from Telecoms says:

    I think you have to get the Capex numbers right first before you do an indepth tariff analysis (especially when you are not working in the Telecom industry and do not know what consitutes in a tariff) – the Capex of $800 was only for Nigeria :-) This strategy is known by Zain and that is why Safaricom cannot even dream of going this low as they are used to high tariff which their customers love them for…if 60% of Zain traffic is going to Safaricom, then surely, Safaricom is making interconnect revenue from all Kenyan operators – how come they themselves cannot afford the Kshs 3 to other operators since they are net receivers ????

  3. [...] recent weeks a brutal price war has broken out between the mobile operators, slashing the cost of calls between networks by at [...]

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