Six months after cutting call rates by 50%, from KES6 (USD0.07) to KES3 per minute, mobile operator Airtel Kenya has announced that it has reduced call rates to KES1 between 6am and 6pm. The new tariff, branded ‘Feelanga Free Kilasiku’ is available to pre-paid subscribers. Introducing the new tariff, managing director Rene Meza commented: ‘We have witnessed a tremendous increase in subscribers and call volumes because of the drop in prices, something that has triggered a ripple effect in the market. This new tariff is in line with our strategy of offering affordable prices to our subscribers’. As reported in CommsUpdate earlier this week Airtel Kenya, the country’s second largest cellco by subscribers, announced that it had added two million subscribers to its network since August 2010, effectively doubling its active subscriber base.
However, the news has gone down less well with Airtel’s rivals, with market leader Safaricom offering a scathing assessment of Airtel’s strategy. Safaricom CEO Bob Collymore told Tech Central: ‘Airtel is using Kenya as the test bed [for Africa]. Because the company has an insignificant market share in Kenya, if they damage their business here it doesn’t matter. They can just pack up and go home. If we all had to shift down to those price levels we simply wouldn’t invest in voice any more. We’d have to retrench staff and outsource work to Egypt or India. I think the government will step in and put a floor on it. Either it’ll do so through a crude tax mechanism, or it’ll change legislation to put a floor on prices’.
For its part, telecoms regulator the Communications Commission of Kenya (CCK) has backed Airtel’s play, with director general Charles Njoroge stating: ‘We do not see the low tariffs having a negative impact to the economy. Savings made by consumers should enable them buy more goods and enable government to generate more income’. Information minister Samuel Phogisio added: ‘This is just a press war among the operators, because one of them has lowered its rates to KES1. They ought to explore all available channels of resolving genuine complaints’.