Telkom Kenya takes war for clients to rivals with flat rate
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Telkom Kenya’s CEO Mickael Ghossein. The firm has introduced an offer dubbed Holla that allows Orange subscribers to make unlimited calls and send 20 SMS to its rivals and access 10MB Internet capacity in the next 45 days.
Telkom Kenya has introduced a Sh10 daily flat rate fee for its voice and data subscribers for services within its network to speed up its return to profitability.
The offer, dubbed Holla, allows Orange subscribers to make unlimited calls and send 20 SMS to its rivals and access 10MB Internet capacity in the next 45 days.
Telkom Kenya has witnessed the fastest growth in subscriber numbers in the year to September, but this has had little impact on its revenues since the bulk of its customers have been talking less and calling rival networks.
This has seen its Average Revenue per User (ARPU) trail that of the industry that stands at Sh420 compared to Telkom Kenya’s Sh140, but the new offering will push its monthly subscriber’s bill to Sh300.
“We intend to grow our voice market share and retain our existing customers by introducing such offers in a market that subscribers have multiple SIMs and keep on switching operators depending on the best offer they get,” Telkom Kenya’s Chief Executive officer Mickael Ghossein told the Business Daily in an interview on Wednesday.
“This proposition will allow the Orange customer to see the benefit of using their phone on a daily basis.”
The loss-making firm had in 2007 targeted to return to profitability by December 2010, but the halving of airtime cost since August 2010 has cut the operator’s sales and profits, prompting some players like Safaricom to increase their calling rates by 30 per cent in October.
The dominance of Safaricom has also hurt its rivals including Airtel and Yu since the bulk of calls in Kenya’s voice market head to its network, which has seen smaller players pay Safaricom a huge share of their revenues in interconnection charges.
Interconnection charges are the fees that operators pay their rivals for calls terminating in their networks. Operators pay Sh2.21 per minute for the service.
Safaricom controls 67.7 per cent market share in terms of subscribers while Airtel has 15.7 per cent, Telkom Kenya 10.4 per cent, and Yu trails 6.2 per cent, according to the CCK data.
Data from the Communications Commission of Kenya shows that Telkom Kenya subscribers made 28.2 million minutes calls in the three months to September to rival networks compared to 14.4 million minutes within the network.
This means the firm was paying more to rivals than its income.
In the year to September, Telkom Kenya added 1.8 million net subscribers compared to Safaricom (1.2 million), Airtel (1.1 million), and Yu (0.16 million).
Besides boosting its subscribers’ monthly bill, Telkom Kenya is keen to encourage its 2.7 million subscribers to make more calls within its network to boost sales and reduce its interconnection bill.
