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Safaricom set to terminate loss making post-paid tariff

Safaricom chief executive Bob Collymore. Photo/FILE
Safaricom chief executive Bob Collymore. Photo/FILE 

Telecoms operator Safaricom is set to terminate two of its post-paid calling tariffs citing failure to make money for the company despite a 30 per cent growth in the number of users in three months to last December.

Safaricom last week sent a letter to the Communications Authority of Kenya (CAK) informing the regulator of the intended cancellation of the service that has more than 140,000 subscribers.

Subscribers to the two tariffs currently pay a minimum of Sh1,000 and Sh2,500 per month plus additional charges for usage of talk time, data or SMSes outside the allowed bundles.

“The Karibu post-paid plan is not profitable; it is a rich tariff where you get talk time, data and texts which are all being sold at below cost,” said the Safaricom chief executive Bob Collymore.

“We have sent a letter to the regulator informing him of our intention to terminate it,” he added.

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Upon receiving CAK’s approval, Safaricom is expected to pull the plug on the Karibu post-paid service which it says has remained financially unsustainable since its introduction in 2011.

Current subscribers will be notified on how long they will continue enjoying the service as priced.

The subscribers will then have the option of remaining on the tariff under revised terms (most likely at higher prices) or cancel their contracts.

The Karibu post-paid tariff has two price plans. For Sh1,000 per month, a subscriber gets 900 minutes talk time for on-net calls, 100 minutes for off-net calls, 100 megabytes of data and 100 on-net SMSes.

For Sh2,500 a month, subscribers get 2,200 minutes for Safaricom to Safaricom calls, 300 minutes to rival networks, 250 megabytes of data and lastly 250 on-net text messages.

What this means is that subscribers on these tariffs pay less than one shilling per minute to make calls.

Safaricom customers on prepaid plans are charged Sh4 per minute for calls made during peak hours (8am and 10pm). Users are charged separately for internet bundles.

“People on post-paid are essentially making calls at less than one shilling per minute. This rate is not only lower than the post-paid tariff we give to corporates but also to prepaid consumers,” said Mr Collymore.

Industry data recently released by CAK shows that in the three months to December, Safaricom’s post-paid clients grew from 312,528 to 431,425, a 30 per cent growth.

During this three-month period, Airtel Kenya’s post-paid clients grew 4.5 per cent to 124,355 while yuMobile’s clients increased 18 per cent to 1,572. Telkom Kenya saw its clients on post-paid decrease by nine to 3,151.

CAK says that the country’s total post-paid subscriptions during the three months increased by nearly a quarter, signifying the growing popularity of this service.

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