Telcos bet on ‘bundles’ to woo customers

In a bid to entice more consumers to take advantage of value-added service on their networks, mobile service providers are now merging their data and voice offerings on single bundles.

The move signals a shift in the way the Kenyan consumer interacts with their mobile service provider, and points to the changing trends in the industry which has been hard hit by competitive forces over the last year.

The latest mobile company to introduce bundling on its network is Telkom Kenya, who announced a trio of offerings dubbed Bunda on its network this week.

The firm follows Essar in offering bundles that include SMS and data in addition to voice service offerings, leaving market incumbents Zain and Safaricom who still segment the prices their consumers pay to use their voice and data services separately.

Telkom’s Bunda offers its subscribers up to 100 minutes of talk time, 100 SMS and 100MB of data for a flat fee of Sh1,000, while Essar offers up talk time worth Sh300, SMS worth Sh300 and 100MB of data on purchase of select phones.

“At Orange, we are very clear that the Kenyan mobile services consumer is very discerning and is looking for extended value from each shilling loaded and the launch of Bunda za Orange is a direct response to this reality,” said Mickael Ghossein, Telkom Kenya CEO.

Competition in the mobile sector has pushed companies to adopt innovative methods of offering their customers more while they struggle to maintain their profit levels.

Both Telkom Kenya and Zain have recorded depressed earnings from their commercial operations over the last year, which they largely attribute to the tough operating conditions in the market which has four players.

Currently, both earn $1 and $5 in average revenues from their subscribers (ARPU), down from the industry average of $7 at the end of 2007.

Essar is yet to release its earnings figures related to its Kenyan unit.

Analysts say this drop in revenues is largely due to the dramatic price movements following the 2008 entry of Essar and Telkom Kenya into the mobile market, which saw the average tariff for calls drop by to half what they were previously.

At the time, the price of calling dropped from an average of Sh18 to Sh8, while the cost of SMS fell from Sh5 to Sh3.50 between December 2007 and December 2008.

These factors have called for mobile players to adopt unique strategies as they move to protect their revenue base.

In September last year, Safaricom introduced Supa Ongea, the first tariff change for the company since early 2008, which offers discounts for subscribers based on the time or location.

Tariffs range from Sh8 and Sh0.80, depending on the traffic to the base station.