With the rapid growth of Information and Communication Technology, telecommunications industry has advanced greatly. Many innovations and inventions are taking place and various players have emerged to share the big opportunities in the sector right from mobile services, data providers, voice calls to financial provisions like M-pesa, Yu- Cash, Zap, e.t.c .
The Kenyan telecom market has in the recent past experienced vicious price wars between the main telecommunication players; hence a significant drops in call and SMS charges. Airtel was the first to drastically reduce its rates. Other players, Orange telecom, Yu and Safaricom had to follow suit in order not to lose
subscribers. Safaricom seems to be the hardest hit, given its large subscriber base that stands at over ten million. The price wars have had a major dent on the profitability of Safaricom, which has reduced greatly since year 2010, especially the voice call profits.
I still think Safaricom should think of returning the campus offer for 3 bob to increase its voice call profits. Relying on the economies of scale, about 5 million people are in colleges and campus. Most of them are no longer using Safcom, but have shifted to cheaper networks like Yu, Airtel and Orange. Now assume that 1/2 of these use at least 20 Kshs airtime this will be Kshs 50 million a day.
With many dual Sims coming up, many have had to buy other Sim cards and maintain a Safcom one for M-pesa services and two to maintain their contacts with friends, families and business associates in the Safcom network. With time they adapt to other networks and completely shift to other cheaper networks like Yu Amua Unlimited.
Thirdly, the new changes on portability enable one to adjust from one mobile service provider without having to change their mobile phone number. This has also reduced the safcom subscribers greatly.
Safaricom might want to rely on the financial rule of 20:80, where the want to satisfy 20% who bring in 80% rather than 80% who bring in 20%. By this, they target the corporate and neglect a majority market, but in future may be the latter will be more profitable. A good example is Equity bank that has capitalised on the middle class and poor or marginalized groups and it’s now the leading profit making bank in East and Central Africa. Other banks are now trying to target what equity has done.
