Safaricom Unshaken by Imminent Price Wars in Telco Industry

Bob Collymore
Bob Collymore, CEO, Safaricom

Bob Collymore

Voice calls are still a big deal in Kenya, even without looking at international calls, local voice calls were recorded to have grown by 8.2 percent in the first quarter of 2018, according to Kenya’s Communication Authority.

During this period, Safaricom posted a decline in voice traffic market share by 6.0% while players such as Airtel posted an increase of 6.7%. This growth could be what motivated Airtel to lower their call rates further to Kes.2 per minute across all networks, a move that was speculated to stir up the competition and subsequently cause a price war tsunami as rivals dash to grab Safaricom’s shrinking pie.

While addressing the issue of an imminent price war, Safaricom’s CEO, Bob Collymore narrated of a similar event about eight years ago while he was just about to take office. At that time, the market was shifting to a fight over who can charge their consumer the least amount for services. At that time, in fear of losing customers to the competitors, Safaricom obliged and lowered their rates a move that Bob says was not sustainable.

Fast forward to 2018 and it feels like Déjà Vu, however, this time around, Safaricom remains unshaken. “We’re not going to move our prices… We have to maintain a sustainable business,” he remarked. The CEO also pointed out that the reason Safaricom has been able to maintain their leadership position as Kenya’s largest telco is that they focused on investing on infrastructure rather than fighting to shrink their own revenue. “If we lose market share because of this, then let it be,” he added.

“Our competitors drop their prices… This results in low returns which then means that they don’t have the revenue to innovate… Next, you will hear them blame Safaricom,” he noted. Mr Collymore made a stand that Safaricom would rather offer better services to their consumers than lock horns with competitors over who charges what.

This move might be a disappointment to consumers who thought that Airtel’s new rates would be a declaration of war that would see subscribers emerge the biggest gainers, however, Telkom and Equitel are yet to react to this new wave of bullets that Airtel is throwing.