Youths on spotlight in phone firms’ battle


Published on 23/11/2008

By Michael Ouma

Even as industry statistics indicate that the market is yet to reach saturation point in terms of mobile network subscribers, operators are aware of the decline in average revenue per user (ARPU) figures in the face of the country’s inflation.

While announcing its half-year financial results recently, Safaricom, whose market share declined from 84 per cent in September 2007 to 81 per cent this year, said its ARPU declined from Sh616 in March 2008 to Sh503 in September 2008. “Prepaid ARPU declined by 17.76 per cent while post paid declined by five per cent. The lower ARPU was due to more consumers with lower spending power especially in rural areas and inflationary pressure which reduced disposable income,” Safaricom said in a statement.

The company also saw a change in churn, the percentage of people who are considered to having left the network if they have not made or received a call or SMS for more than six months. Safaricom’s prepaid churn increased from 23.7 per cent to 25.4 per cent while post-paid churn has declined from 4.3 per cent in September 2007 to 0.1 per cent in September 2008.

In the face of these realities, Kenya’s mobile network operators are shifting their focus to the youth segment of the population (who form more than half of Kenya’s population), launching products, services and tariff structures which suit the youth’s lifestyle and spending habits.

This is what guided Econet Wireless’ during its entry into the market, last week with the company’s Chief Executive, Mr Michael Foley, saying they would target the youth.

Unlimited SMS

Initially, rolling out in Nairobi and Mombasa, before spreading into other parts of the country within the first quarter of 2009, operating under the ‘Yu’ brand, said it would unveil a variety of low cost products for the consumer in two months.

Econet Wirelss subscribers will hold numbers bearing the prefixes 0750, 0751 and 0752.

The other network, Zain Kenya has also introduced an all new mobile tariff, targeting the youth, called ‘Club 20’. The new tariff offers its subscribers unlimited SMS at a flat rate of Sh20 and also enables them to make free calls between 10 pm and 6 pm.

The launch of the ‘Vuka’ tariff has seen Zain Kenya’s subscriber numbers record a significant increase with a study showing that five out of every ten new mobile phone subscribers in Kenya during the months of August and September selected Zain as their preferred mobile service provider.

According to the research carried out by a local firm AC Nielsen Kenya conducted randomly, “customers are selecting Zain owing to the mobile phone company’s superior network quality and affordable on-net and cross network calling rates.”

Zain Kenya reportedly signed up 1.5 million new subscribers after the launch of ‘Vuka tariff’ campaign.

Zain Kenya managing director Mr Rene Meza said that according to the research commissioned in October, 51 percent of all new mobile subscribers were joining their network which was re-branded in August.

‘Choose your number’

Meza said its customer base had grown to about three million, adding that it was hard to predict what market share the operator would have in the near future as competition is still very stiff.

The tariff is targeted at youth and the company wanted to fulfill a specific need of a specific niche market and is not a limited offer.

Another research done by the Wireless Federation further says that the Zain Kenya’s new Vuka Tariff “has been successful due to the Choose Your Number service which enables existing and new prepaid customers to select and reserve numbers of their choice on any prefix soon after they activate their lines.”

Wireless Federation, based in London, is an industry research firm whose mandate is to provide its members and customers with industry knowledge.

A further pointer to its focus on the youth was demonstrated by Zain’s launch of a low cost ‘Motorola’ handset in the market, which retails at Sh1,200 for customers connecting to the Vuka tariff.

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