The battle for Kenya’s mobile subscribers moved a notch higher last week after mega-dealer Mobicom rolled out a new hunt for clients under Telkom Kenya.
Just after its flight to Telkom, the company started a major rebranding exercise of its 42 outlets, said to cover up to 85 per cent of Kenya’s population.
In a move aimed at attaining Telkom’s target of doubling its second quarter revenue, Mobicom rolled out one of the most lucrative subscriber sourcing campaigns.
The promotion enticed customers with free handsets upon the purchase of Sh1000 Orange airtime, capitalising on Mobicom’s national footprint, to woo new subscribers to the network.
Telkom dealers are expected to earn more commissions from a raft of new products the company intends to introduce such as money transfer and data services through its 3G platform.
The firm is estimated to control five per cent of Kenya’s mobile telecoms market, and is said to have granted Mobicom a lucrative dealership contract that leaves it with almost total control of Telkom’s business.
Under the agreement, all non-preferred dealers cannot buy services directly from Telkom but from the preferred dealers.
The preferred dealers will earn a commission of 10 per cent on airtime sold while the non-preferred will earn six per cent. Safaricom dealers earn a graduated rate of commission on airtime sales paying higher for large denominations.
Unlike Safaricom, Telkom is yet to sell laptops and high-end phones through dealers.
The company’s dealers earn 7.5 per cent upfront on every internet modem sold.
Mobicom said that Telkom’s decision to cut down the number of dealers and a recent deal with the government for control of the National Fibre Optic network offers the company better growth prospects.
Safaricom’s 400 dealers handled more than Sh5 billion worth of business per month by September last year — excluding the M-Pesa business estimated to have been worth more than Sh10 billion per month.
Analysts say that Mobicom will have to work extra hard and come up more lucrative offers if it is to turn the tables against its former partner, Safaricom.
The operators have been using different incentives to woo and keep the dealers in their stable.
Other than earning commissions for every SIM card sold.
Safaricom, Zain and Telkom pay their dealers 10 per cent of the airtime spent by a subscriber during the lifetime of the SIM card in residual commissions.
Telkom Kenya requires dealers to have Sh5 million in working capital, open four branded shops and a network of eight direct agents who can transact business worth Sh20 million per month.
Telkom earned Sh2.3 billion in revenues in the first quarter of the year, down from Sh2.7 billion in the same period last year.
The firm’s revenue growth projection is supported by the ongoing enhancement of its GSM and wireless coverage.
Winning Mobicom to its side -- one of the few dealers with a national footprint -- offers Telkom Kenya a much larger sales platform to spread its footprint and increase visibility in the marketplace.
Bharti, the new owners of Zain, have recently announced plans to spend part of the $150 million they intend to invest in Kenya on shoring up the distribution network and improving their services.