War! …In the Nigerian Telecoms Industry
Who is winning the Telecoms Price War?
Anytime you flip through the pages of dailies, or watch TV, one thing you most probably see is an advert or a commercial from a telecom operator announcing one new product or the other. The next day, you are bound to see another operator coming out with another ‘exciting’ offer. And so goes the battle to win the heart of the teeming subscribers in Nigeria with mouth watering offers which are now turning the industry into price war zone. In this kind of war, who wins and who loses and will it ever end? By SAMSON AKINTARO
It’s Not Over, Until….
“Now that I've seen what war is ... I know that everybody, if one day it should end, ought to ask himself: ‘And what shall we make of the fallen? Why are they dead?’ I wouldn't know what to say. Not now, at any rate. Nor does it seem to me that the others know. Perhaps only dead know, and only for them is the war really over”—Italian Poet and Novelist, Cesare Pavese once wrote. For the Nigerian telecommunications industry, it is a war fought with neither swords nor guns nor nuclear weapons. It is a stiff competition cloaked in the garment of war and obviously only the dead could say the war is over.
The grandstanding continues unabated as each operator roll out new offers and products in a bid to outsmart the other. The target remains: to get the larger chunk of the over 100 million telecoms subscribers and this has culminated in a barrage of promos and offers that left the subscribers spoilt for choices.
But for the operators, it is not over until it is over. Each pride itself as the leading and the best network for the subscribers to clinch to and as such has to roll out many fantastic products that others are not offering. The fact is that after such ground breaking products, the other competitions come out with other products that surpass the previous and the battle for supremacy continues.
Today, each of the four GSM operators in the country has nothing less than four categories of tariff plans, each offering its own unique propositions for subscribers to choose from. As they roll out these products, the subscribers get confused the more. But most importantly is the fact that the competition in the industry has forced down the price of telephony in the country, to the subscribers advantage.
From an average industry rate of N35 to N42 per minute across networks in 2010, today, subscribers can make call for as low as N6 per minute depending on which network and what tariff plan they have chosen. This is one key product of the raging price war in the telecom industry. Unfortunately, the end result may not be too palatable for the operators, to put it mildly. Already, there has` been a sharp drop in the industry’s Average Revenue Per User (ARPU), which invariably means drop in revenue for the operators.
Two years ago, the ARPU, which is a financial performance benchmark in the telecoms industry that measures the average monthly revenue generated by operators from each customer, was put at approximately N1,800 by the National Bureau of Statistics. However, latest figures released by the industry regulator, Nigerian Communications Commission (NCC) put the industry ARPU at N1000 as at January this year, which is showing about 45 per cent drop. Although many are quick to note that the drop in ARPU is attributable to drop in purchasing power of many Nigerians, the fact remains that Nigerians in their peculiar nature would prefer to skip their meal in order to make calls to their relatives elsewhere.
A partner at an international telecoms consultancy firm, Mr. Joerg Hildebrandt, who recently led a low-ARPU study in Africa, had projected that ARPU would dramatically decrease due to increasing competition and price reductions. According to him, ARPU would drop from N1,800 to N600 in sub-Saharan Africa by 2013, which would pose a major challenge to operators.
Yet, with this reality, an end is not in sight for the ongoing price war, rather, the operators are in their board rooms re-strategising how to fire fresh shots that will throw the competitions off balance. While each of the four GSM operators still remain very strong and ever ready to continue the battle, the first set of casualties in the industry have been the CDMA operators. Of course many had died because they did not have the financial muscle to prosecute the war started by the GSM operators. And for the surviving CDMA operators, they have obviously raised an olive branch and decided to stay at their own corner even as they struggle for survival.
But for the four giants at war, the industry is waiting to see who blinks first. Apparently all the four operators still have enough muscle to flex and this is why despite other daring challenges such as multiple taxation, lack of infrastructures and a host of others, they are still able to prosecute the war of supremacy with unending offers and promos. Will there be a winner on the long run or the operators will opt for a truce? Only time will tell.
The Battle of Offerings
In what is seen as a hot contest to win more subscribers on their networks, telecommunications operators in the country are always on their toes in introducing new offerings to the market. While these offerings often come with a façade of innovation, the underlining motivation is the quest to get more subscribers by surpassing what the competitions are doing. A critical look at some of these offerings will also reveal a kind of recycling, but with a tinge of difference to make it look as new, which may mean that there are actually nothing new in the products and offerings in the real sense of it. These offerings, interestingly, come in special packages that targets specific category of subscribers, especially, youths and SMEs.
MTN Nigeria kick-started the revolution with the launch of its Extracool in 2006, particularly introduced to capture the youth market with free mid night calls. This package offered users free calls from 12.30 am to 5.30 am everyday, with a condition that they have N100 credit on the phone. This was a hit for MTN. Many Nigerians jumped at this offer, especially at a time when mobile telephony was just becoming a common luxury and for the fact that they could make calls for complete four hours without being charged, many were ready to deprive themselves of sleep. This offer came with option of Extraconnect, which allowed subscribers to add some numbers as Friends and Family who can be called at the rate of 25 kobo per second.
Zain Nigeria, (now Airtel) responded to this by also introducing Zain Tru, which offer subscribers one of the cheapest GSM on-net call rates at 25 kobo per second (Monday to Friday) and 21 kobo/second on weekends. Zain truTalk also came with everyday free night Zain on-net calls.
MTN was to later replace its Extracool and Extraconnect packages with a set of new offerings, which also came with free weekend calls. The new packages came in form of Smartlink, which was meant for accomplished individuals; Prolink for up and coming professionals; Funlink for the young and trendy; Bizlink for active entrepreneurs and Happilink for the families and the working class.
Chief Marketing Officer, MTN Nigeria, Mr. Bola Akingbade, said at the launch that the new offers would ensure that its customers enjoy more call time at highly discounted rates across various platforms.
He said one of the highlights of the new packages is free weekend calls, stressing that the Funlink segment, affords customers to make free calls all through the weekend to a registered "best friend."According to him, both registered 'best friends' are to be charged only N100 each for this novel service which runs from 12:01am on Saturday to 11:59pm on Sunday, emphasising that the other market segments offer discounts of up to 80 per cent on calls and services.
But MTN is not done yet. It threw a fresh challenge to the competitions with the introduction of MTN Family and Friends, another mouth watering offer that allow its subscribers to make call for as low as 17 kobo to any network including international numbers, which was described as the cheapest tariff available. On MTN Family & Friends, subscribers are allowed to register up to TEN (10) numbers as Family and Friends numbers and enjoy 17kobo/second when they call any of these TEN numbers, from the very first second.
“But that's not all... To ensure you get even more value, MTN Family & Friends now allows you to add even more MTN numbers or other local GSM numbers or even international numbers (US or Canada) so you can enjoy call rate of 17kobo/second when you call any of your registered numbers. You'll enjoy 30kobo/second on all your calls to other MTN numbers not registered as your Family and Friends numbers while your calls to other local off-net numbers will be charged at 50kobo/second. There is no access fee or daily charge on this plan, what you see is what you get,” the company said.
Similar to this is the MTN Super Saver Offer, which allows customers to enjoy call rates of 17 kobo per second on all MTN - MTN calls after the 1st minute of call for of the day on the Super Saver plan and 35 kobo per second for calls to other networks. Subscribers on this package can also call US, China, Canada and UK landline at 20 kobo per second from the very first minute.
Airtel’s Revolutionary Entry
Though already in the country since the beginning of the revolution in 2001, beginning as Econet and later changed to Vmobile, Celtel and then Zain, Airtel Nigeria made a statement upon its entry in 2010 with its 2good offer, which was described as revolutionary. This came with a proposition that customers can make calls to any network at 20 kobo per second after the first one minute of the day. In addition, 2Good offers 20 free on net SMSes to every customer with only N100 recharge every month.
Rajan Swaroop, Managing Director & CEO of Airtel Nigeria, while speaking on the offer, expressed the confidence that Airtel would live up to its promise of delivering innovative, affordable and relevant solutions to ‘bring freedom’ to its customers.
“At Airtel, we are driven by our vision to be the most loved brand in daily lives of Nigerians. 2Good offers Freedom to our customers to make more calls to their loved ones. This is the first of the range of our exciting products, with superior network and service, which would redefine ‘Freedom’ to mobile communications for Nigeria” said Swaroop.
Five months after, Airtel dangled another offer before its subscribers with the launch of Airtel Big Family. The Airtel Big Family package allows existing and new customers to make On-Net calls at 15 Kobo per second and Off-Net calls at 30 Kobo per second, after the first minute call of the day at 60 Kobo per second, upon migration to the plan.
Announcing the new package in Lagos, Swaroop, said the introduction of the new tariff was a further demonstration of the company’s determination to give Nigerians more tangible value and empower more people across the country to freely communicate as a big family, saying that it was in line with its well articulated plan to deliver innovative, affordable, relevant, and most value based telecom solutions in the country.
Additional benefits of the new plan include 20 bonus SMS (Short Message Service) monthly after the first recharge of the month of more than N100. The free SMS applies to numbers within Airtel network. Another added value of the new tariff offer is attractive SMS rates. The wallet friendly SMS tariff plan includes N5 for Airtel to Airtel, N10 for to other networks and N15 for international locations.
Swaroop said: “With the Airtel Big Family package, we have given our customers the benefits of communicating freely with all their family, relations and friends who are on Airtel, at affordable rates.”
Also, customers on the plan will enjoy the benefit of calling such favourite international destinations such as the United Kingdom (landlines), United States of America , Canada , China and India at 20 Kobo per second call rate.
Airtel was to later build on this by introducing the Airtel Big Family Xtra, which it described as ‘more enriched’ than the previous package. According to Airtel, in addition to 15 kobo per second (1k/sec) on net tariff that is available on the Airtel Big Family package, customers will have the benefit of making free on-net mid-night calls daily; they will get 40 free SMS(s) and receive free data worth 4MB between 12.30 am and 4.30am. Customers on the package are required to make one minute of local call between 8 am and 12 mid night to enjoy the free midnight calls, SMS and data offer.
Airtel Nigeria’s Chief Operating Officer and Executive Director, Deepak Srivastava, said the Airtel Big Family Xtra offer will continue to give Airtel customers the unique benefits of making calls to all on-net numbers at 15 kobo per second and 30 kobo per second to other networks after the first minute call of the day at 60 kobo per second.
Additionally, customers can call one Airtel number of their choice at 10 kobo per second all day long.
Just recently, the company came up with an upgraded version of its 2good package by launching the 2good Time offer. This, it said came with distinctive benefits that allow customers choose from among three time bands during which they can connect family, friends and business associates at pocket friendly on net rate of 10k/sec.
According to Airtel, the three special time bands are: Traffic Time - 5am to 7am; Lunch Time - 1pm to 4pm and Party Time - 10pm to 12.00am. During these time bands, customers will enjoy special on net call rate of 10k/sec. Subscribers to the 2Good Time service will also enjoy midnight on net call rate of 10k/sec as well as 20 free SMS on their first N100 recharge of the month.
Speaking on the value offering, the Chief Operating Officer and Executive Director, Airtel Nigeria Deepak Srivastava, said that the company will continue to offer innovative, flexible and affordable value offerings that will meet the growing demands and needs of all its customers.
“The 2Good Time tariff plan with its three options of Traffic Time, Lunch Time and Party Time with a uniform on-net call rate of N10k/sec will come in handy for our customers to select the most suitable time of the day to share love with family and friends, or close deals with business associates via voice and SMS. This is in addition to the special attraction of 2Good such as low international call rate, free 20 monthly complementary SMS, 20k/sec flat on net / off net call rate,” srivastava said
He added, “with this, 2Good comes bigger, better and even more pocket friendly. At Airtel Nigeria, we are masters of innovation and we delight in changing the rules of the game positively. As true innovators, we always put the customer first in all that we do. I say this because we normally put in a lot of effort and hard work - in terms of painstaking research and in-depth analysis - before we introduce any of our value offerings.
I am sure that you will agree with me that the Airtel’s packages and offerings are always unique and practical. This is because our value propositions are carefully tailored to meet the specific needs of telecoms consumers in the country irrespective of their social status. Indeed, our products and services are essentially and proudly Nigeria.”
Enters Etisalat with a Bang!
For the latest entrant into the market, Etisalat Nigeria, it has been a gallant display of innovations with its array of packages. Building on its entry packages such as ‘Easystarter’ and ‘Easylife, which come with its own unique propositions that nearly threw the older players off balance, Etisalat rolled out its ‘Easy Cliq’ another exciting package targeted at youths. The package came with innovative and exciting features like Unlimited SMS, Free Midnight Calls, Talk’n’share, Bonus on incoming calls, one cliq, one tune, Facebook update service by SMS and Cliq Ring Back Tune. The company said it believed that these features and freebies would excite young people and help them shine in their various cliques and communities of interest. Chief Executive Officer, Etisalat Nigeria, Steven Evans, explained that Easy Cliq is tailored specifically to meet the needs and desires of the average Nigerian youth who values his friends, desires to constantly stay in touch with them and also desires to be on top of happenings in his funky world. “This product is further demonstration of our unflinching resolve to create a world where our customer’s reach is not limited by matter, finance or distance. We have loaded Easy Cliq with features and services that are sure to excite subscribers in the youth segment”.
Giving further details of the product, Wael Ammar, Chief Marketing Officer, Etisalat Nigeria, said that Easy Cliq offers the Nigerian youth an opportunity to express him or herself in many exciting ways. “Easy Cliq is loaded with features like unlimited SMS, free midnight calls, Talk ‘n’ share, Bonus on in-coming calls and one cliq, one tune”.
Wael went further by explaining in details the innovative elements that make up each of the features available on the specially designed youth package. “With unlimited SMS from Etisalat, the subscriber gets a bonus SMS for every SMS sent off net. This means that each time a subscriber sends a text or SMS to any one on another network, they get free SMS that they can send to any of their friends on easy cliq. Young people on our network can also make free midnight calls everyday between 12.30 and 4.30am as long as they have recharged with a minimum of N100 within the week. Another innovative feature of Easy Cliq is the fact that the receiver of a call can agree to share the cost of the call initiated to them with Talk ‘n’ Share.
“With easy cliq, subscribers are automatically rewarded with free airtime for calls received from other networks and Etisalat lines that are not on Easy Cliq with the innovative bonus on incoming calls feature. This will undoubtedly encourage our young subscribers to talk with their friends whether they are on the easy cliq package or not” he said.
Aside this, Etisalat recently announced that it has revamped its Easylife tariff based service with the introduction of ‘return of access fee’ and ‘easylife postpaid’. The revamped Easylife package unveiled in Lagos offers subscribers cost effective and affordable call rates as well as free text messages to other Etisalat lines on both prepaid and postpaid lines.
At 20k/sec, customers on this package can make calls to all networks in Nigeria, USA, UK Landlines, China, India and Canada and still enjoy a special discounted offer of calling two special numbers at 15k/sec. This is in addition of 600 free text messages to any Etisalat number monthly. Other features of the new tariff include a monthly access fee of N750 that allows subscribers enjoy an array of value-added services including – roaming in 180 countries, opportunity to choose own preferred number, VIP caller service which enables subscribers restrict specific numbers from reaching their mobile lines, Blacklist service which allows a subscriber to accept all incoming calls except those defined as blacklisted and white list which allows a subscriber to block all incoming calls except those defined on the white list.
In addition to these, Etisalat also offers a number of other products and services in the Nigerian marketplace, which include EasyStarter, the flagship product designed for the mass market segment; Elite World; designed for its post-paid customers; EasyNet data service, and Blackberry Enterprise and Internet Service.
Globacom’s Value Offerings
The Second National Carrier Globacom is not left out in the frenzy. As an improvement on its previous packages, Glo launched what it described as ‘the best value offer in the country’s telecom industry’ with its Glo Infinitio. The revolutionary tariff plan offers call rates of 25 kobo per second to all networks starting from the very first second. The Glo Infinito came with two options: the first option allows subscribers to select a special number (Glo), which they can call at a rate of 2 kobo per second with no monthly rental. The second option allows them select 5 special numbers (Glo) , which they can call at the rate of 18 kobo per second with no monthly rental.
The company noted that unlike other tariffs in the market, the 25 kobo per second charge is a flat rate which applies for all local calls irrespective of which network is being called or time of day or which part of the country the call is originating from. “The package also allows subscribers to call one Special Number at only 2 kobo per second. Interestingly, no daily or monthly rental is charged to enjoy the very cheap rate. The subscriber, however, has an option of registering 5 Glo numbers which he can call at 18 kobo per second. Again, registration is free and there is no rental charge. In addition to the amazing tariffs, Glo is also offering up to 20 per cent bonus on recharges made by subscribers. N500 recharge attracts a 10 per cent bonus credit, while N1000 recharge will give the customer 15 per cent bonus air time. On the other hand, N5,000 recharge gives a 20 per cent bonus credit to the customer. Glo is also offering free night calls from 12 midnight to 5 a.m. Subscribers are expected to have used up to N200 air time in the previous week to qualify to make free night calls for the next 7 days,” the company said in a statement announcing the package.
Group Chief Operating Officer of Globacom, Mohamed Jameel, said the tariff package was designed to offer subscribers real value for their money by ensuring that what they see is what they get, bereft of any hidden charges or conditions that are often the subject of fine print and thereby positioning Glo as best value provider in the market.
“We are offering a new tariff plan that gives the customer MAXIMUM VALUE. You are charged 25 kobo right from the first second to the last second. Competing tariffs either charge monthly daily rentals or charge higher for the first 60 seconds and drop the rates for subsequent seconds. When you do the calculations properly and add the rental payment or consider the charge for the first 60 seconds, you will realize such tariffs are indeed not as attractive as they are made to look.
“But with the new Glo offer, the subscriber gets a truthful and easy-to-understand payment plan. For instance, while the Glo subscriber pays N15 for first minute of call made within and outside the network, other networks charge between N24 and N30 for calls within the network and between N30 and N36 for calls going outside the network,” Jameel noted.
The Glo GCOO explained that even where other networks drop their tariff from the second minute, the rental or first minute high charge robs off any savings the customer may have made. “This can be illustrated with a 3-minute or 5-minute call on the Glo network for which the subscriber will pay N45 or N75 respectively. The same durations of call on other networks will be charged at between N60 and N104 and between N90 and N174 respectively depending on the operator. Glo therefore, offers much better value than any other network, Jameel affirmed.
He also stated that the Glo Special Number at 2k per second and the Family and Friends package – 5 numbers at 18 kobo per second -- are the best such offers in the market as competing packages all have rental fees and conditions attached to the benefits.
He added that the company would carry on with its long-established tradition of leading the vanguard of innovative services and affordable tariffs in the telecommunications industry.
Indeed, Glo still has more coming. In one swoop, Globacom rolled out four different packages in November 2010, through which the company said it aimed at optimizing call costs for its subscribers based on its Expect More campaign platform. The four packages include More Classic, More Prime, More Business and More Power. The packages give the subscriber savings of between 10 and 60 per cent on monthly spend depending on the chosen tariff package. Globacom’s General Manager, Prepaid Marketing, Ashutosh Tiwary, said that in addition to the huge savings on calls, the four packages also give subscribers 10 to 20 per cent free Glo-Glo bonus talk time on every recharge of N500 and above, 20 free Glo-to-Glo SMS every month and 35 hours free Glo-to-Glo talk time per week from 12 midnight to 5 a.m.
This was to be followed by the launch of Glo Flexi, Glo Yarn-me-more and Glo 1derful in 2011. The Glo Flexi is said to offer up to 99 per cent discount on calls made, depending on the time of day and geographical location of the subscriber.
Mohamed Jameel, Chief Operating Offi cer, Globacom Group, said at the launch that the new Glo Flexi plan offers the biggest discounts ever offered by any telecommunication network in the country, as subscribers can talk for as low as 1Kobo/ sec.
The Glo Yarn-Me-More came with propositions that after the first 60seconds/1minute (daily) call charged at the rate of 55k/s, the subscribers can enjoy 15k/s glo to glo calls and 25k/s glo to other networks calls. The Glo 1derful on the other hand rewards the customer with free minute on a c all for every minute and gets the next minute of that call free, irrespective of the call being on net or off net. According to the company, the prepaid tariff enables users to pay for one mintue, while glo pays for the next mintue of the call.
The Scramble for Youth market
Interestingly all the operators have spotted a gold mine in the youth population of the country and this has opened a new chapter in the struggle for market share. Today, all the GSM operators have one or two packages targeted at the youths, with each trying to garnish its offerings with value added propositions.
Globacom’s G-BAM Hi 5ive
Coming as the first in the series of latest packages targeted at the youths by GSM operators in the country, Globacom sees the G-BAM Hi 5ive as another revolutionary product to satisfy the yearnings of youths for affordable calls with freebies. According to the company, G-Bam Hi 5ive allows subscribers to call five special numbers at only five kobo per second. It offers a unique proposition to the youths of Nigeria by making the immensely popular and ubiquitous social networking site Facebook Free. It also offers subscribers several other attractive benefits including free airtime on activation, free night calls and lowest SMS charges in the Nigerian telecoms market.
GBAM Hi 5ive seems to be a hybrid of Glo Infinito but with more interesting features coming with different options such as: G-BAM Weekender, which allows subscribers to chat for free from Friday 6pm to Saturday 6am and Saturday 6pm to Sunday 6am.
G-BAM Bonus allows the subscribers to earn N500 Free airtime upon SIM activation and recharge. This include bonus of N100 on activation (N50 to any network and N50 to Glo) PLUS bonus of N200 each on 1st and 2nd recharge of N200 or more within 7days of activation. G-BAM Social enables free Facebook browsing between 1am and 6am every day. G-BAM Nites gives free night calls, while G-BAM Scholars offers the subscribers the chance of winning $5 million in scholarships.Aitel Club 10
In October last year, Airtel came up with what it called Airtel Club 10. This, the company said came in line with its corporate vision of creating innovative, exciting, relevant and affordable telecommunications solutions. The package, it said, would enable Nigerian youth as well as the young-at-heart to create their own clubs of 10 and communicate freely through voice, SMS and data at very affordable rates.
“Airtel Club 10 allows subscribers to connect to nine people which may be close friends, school mates and family members at an attractive rate of 10kobo per second; N1 per SMS, and can benefit from a variety of complimentary offerings including: free music download, data bundle, caller ring back tone (CRBT) and games” the company had said.
Speaking on the offer, chief operating officer and executive director of Airtel Nigeria, Deepak Srivastava said Airtel Club 10 is an offering that will further revolutionize the telecommunications industry in Nigeria as it gives young Nigerians the power and freedom to enjoy innovative telecoms packages at pocket friendly rates.
He said following the launch of telecoms offerings such as 2Good, Big Family and 2SIMs, there was a need to design an exclusive and exciting package that will meet the needs, demands and aspirations of Nigerian youth.
"Airtel Club 10 is a result of painstaking research. We understand that Nigerian youth are trendy, social, hardworking and innovative. So, we created a package that will meet all of their needs without an adverse impact on their pockets. With Club 10, it is fun all the way as young Nigerians can now build a wide network of friends, enjoy complimentary data access and benefit from a wide range of free Value Added Services," said Srivastava.
Under the Club 10 package, customers can make calls at 10k/sec for registered numbers; calls to other service classes within the network are billed at 20k/sec while calls to other networks are billed at 30k/sec. However, customers will be billed 60k/sec for the first minute. For SMS, customers' group's SMS are billed at N1; other on-net SMS are billed at N3 and off-net SMS at N5. Free 10MB data valid for 1 week after N200 usage within 1 week. Free on-net mid night calls apply within 12:30a.m to 4:30a.m.
In what appears to be a quick response to Airtel’s Club 10, MTN in April this year came out with its own special offerings for the youth. This time, the company called it MTN Pulse, and this it said came in line with its enriching lives value proposition.
MTN Pulse offering is specifically designed to give the youth a unique platform to connect around their common likes, passions and lifestyle.
An upgrade of MTN Fun-link, the new offering is a reloaded platform for the Youth and Trendy’s Segment, offering young people across Nigeria the opportunity to be part of the largest youth community that is vibrant and distinctive.
The General Manager, Consumer Marketing, MTN Nigeria, Mr. Kola Oyeyemi, while speaking on the new value proposition, noted that the youth segment of the society represented a group of dynamic people who needed to be catered for in a special way.
“MTN has identified the youth segment as the backbone and future of every economy; therefore, they must be provided with services and products that will enhance their likes and passions in a way that adds value to them,” he said.
The new package, which is described by the telecoms company as a gift for the young generation, is loaded with enticing freebies and benefits. Embedded in the new product offering is a Closed User Group package that accepts as many members as possible, offers the lowest call rate to the largest community of youths, retains more of chargeable minutes within the network and provides unrestricted access to SMS and Internet freebies.
Also included in the special package is a new price offering with a community pricing that offers an intra rate of N10k/sec, SMS chat at N5, monthly freebies of 50 SMS, 10MB data on minimum recharge of N100 as well as Y’ello Friday surprises of more freebies and promotional as well as discounted offers.
Oyeyemi posited that the package would positively redefine friendship, create momentous fun and offer amazing freedom. “MTN is offering the youth a package that effectively fits into their lifestyle, that provides an opportunity to freely express themselves, and enjoy lively and endless fun, while socialising in a trendy way. We believe that they will cherish this greatly” he enthused.
Etisalat’s Easy Cliq Reloaded
This is the flagship youth product for Etisalat and the company has been re-packaging to meet the prevailing circumstances in the industry. Based on this, the company recently unveiled a repackaged and reloaded Easy Cliq into the market. The Easy Cliq package is specially designed to cater for the needs and lifestyle of youth market segment.
According to Etisalat, the new Easy Cliq is loaded with two new features, the Cliq for the Week and Cliq for the Day, which offers subscribers new experience and benefits weekly and daily. While Cliq for the week offers 15 MB of free data for subscribers when they recharge N200 or more weekly; Cliq for the day offers discounted call rate of 25k/sec to other Easy Cliq subscribers at a daily fee of N5. The upgraded Easy Cliq also boasts of fun-filled features like unlimited SMS, free midnight calls, Talk 'n' share, Bonus on in-coming calls and one cliq, one tune which successfully endeared the product to the youth and young at heart when it was initially launched into the market in May 2009.
Speaking at a press conference to unveil the new Easy Cliq, the Chief Executive Officer, Steven Evans, explained that the product is being packaged to meet the ever-increasing demand of the youth market for unique service offerings and data services.
'Easy Cliq is repackaged to showcase our commitment to subscribers who constantly desire a refreshing and dynamic approach to expressing themselves in the way they communicate with friends and loved ones. It is also for our young subscribers who have a high propensity to consume data thus, enabling them express themselves and connect uniquely with their peers. We have reloaded Easy Cliq with additional services designed to further endear and excite subscribers in the youth segment'.
Explaining the recharged qualities that have contributed to making the new Easy Cliq a much better package for existing and potential subscribers, Chief Commercial Officer, Wael Ammar said that in addition to existing unique features, the repackaged Easy Cliq boasts of two levels of instant bonus as a reward to subscribers when they recharge with N200 or above in a week. Subscribers will enjoy 15MB free data, and 10 free MMS on the Cliq for the week service which is available by default. He explained further that the Cliq for the day is an opt-in feature which offers a discounted call rate of 25k/s to other easy cliq lines for the whole day at a daily fee of N5.
While emphasizing the rationale behind the upgraded product, Ammer said that the company constantly seeks new ways to ensure customer satisfaction hence its decision to review the product and load it with even more unique offerings all for the benefit of its teeming customers. 'We constantly review our products with a commitment to always raise the bar for our customers' satisfaction. We are confident that the new Easy Cliq will surpass the expectation of our customers', Ammar assured.
…And SMEs Too
Just as the youth market is critical to their business, the telecoms operators have also identified a niche market in the SMEs in the country. And this market has also become another battle field for the operators. It is not surprising that each of the operators has a specific product competing for the segment, with each boastful of best offerings.
Airtel threw the first challenge in February this year as it launched what it called Club Business, a package aimed at boosting business productivity and profitability for Small and Medium Enterprises (SMEs).
According to Airtel, the Club Business offering will enable owners of SMEs to form a club of 20 members with their employees and thereby benefit from specialized discounts including free calls for the for first 100 minutes and subsequent charge of 20k/sec for Airtel to Airtel calls, while SMS to club members will be at N1.
Chief Operating Officer and Executive Director, Airtel Nigeria, Deepak Srivastava said the Airtel Club Business is specially designed to address the prevailing business environment in Nigeria, providing opportunities for small business owners to adopt creative and strategic initiatives to survive the harsh business climate.
He said the company considers the SME sector as vital to the growth of the nation’s economy and as a result committed to creating products and services that will boost profitability and productivity in the sector, ensuring return on investments and economic growth.
The Airtel Club Business allows a minimum of five users and a maximum of 20 Airtel customers. Club members, calls to Airtel numbers are billed at 20k/sec, while calls to other network will be at 30k/sec after the first minute at 60k/sec. International call charges remain at the prevailing rates. Furthermore, SMS to other Airtel lines outside the club will be at N5, while SMS to other networks and international lines will be N9 and N15 respectively.
Also, a monthly Access Fee of N500 would be charged while a monthly minimum recharge of N500 on the Master Line would be required to enjoy the special business solution package.
Under the offer, the Master Line would be responsible for paying access fees and monthly commitment for all other lines in the Club. The first 20 number additions that make up a club would be free while subsequent reviews would be charged at N50.
Two months after, in April specifically, MTN responded with what it called MTN MyOffice, which is a suite of solutions designed to enhance the way SMEs collaborate. According to MTN, “With better collaboration comes higher productivity and ultimately, profitability.”
The suite includes: Closed User Group (CUG) services, devices bundled with mobile broadband Internet, fixed broadband Internet with free modems, cloud services, SME portal, as well as an array of Web and email hosting, domain registration and Web development services.
The company’s Chief Enterprise Solutions Officer, Mr Babatunde Osho at the launch of the solution in Lagos, described the SME segment as a major driver of a nation’s economy. According to him, the crucial role played by SMEs informed the Telco’s decision to enhance performance of players in this segment through the introduction of MTN MyOffice with the intention of giving them access to effective ICT requirements to run their businesses in a cost efficient way. Also speaking, Senior Manager, SME Segment Management at MTN, Ms Barbara Anozia, said through the suite, MTN would offer SMEs cost effective and efficient one-stop shop for all ICT needs.
She said with MTN MyOffice CUG, SMEs can enjoy zero-rated mobile calls among staff members, monthly for as low as N500. She said customers who subscribe to the mobile broadband Internet will enjoy 20 per cent discount on the price of the CUG.
Additionally, Ms Anozia said the solution offers businesses a broad range of devices from low-end feature phones to high-end smartphones, bundled with mobile broadband Internet plans. She further said with MTN Desktop as a service, customers can pay for what is really needed, without grappling with the cost of high-end devices and accompanying software licences.
If Airtel and MTN had thought these would be an exclusive market for them, that would be a dream that never came to reality because Etisalat and Globacom were on their trail. Just a month after, Etisalat also rolled out its business proposition suite tagged ‘easybusiness’ specially designed to lower costs for Small and Medium Enterprises (SMEs) in the country and aid their growth.
Speaking at the official launch of the package in Lagos, the Chief Commercial Officer, Etisalat Nigeria, Wael Ammar, said the introduction of ‘easybusiness’ was informed as a way of reiterating its commitment to the growth and development of Small and Medium Enterprises (SMEs) and provide a suitable condition for businesses to operate.
He said ‘easybusiness’ proposition suite is specially designed to lower costs for SMEs, while increasing profit and providing value to the businesses. According to him, the Easy Business Suite is a one-stop shop for the communication needs of SMEs designed to cater for the various SME segments as it comprises three variants- Premium, Compact and Complete which are bundled with free minutes and SMS monthly within a selected Closed User Group (CUG) and a national call rate of 25k/sec to all networks in Nigeria as well as five international destinations (US, UK landline, China, India and Canada).
“We have considered that most SMEs have limited budget and based on this we have decided to improve our package for SMEs so that they can minimize the telecommunication cost for doing their business. The most interesting part of the package is that it is easy to use, requires little or no customization and skill because we understand that business owners are usually busy and may not have the time for high technological products, he said.
Globacom followed suit in June by launching what it described as a range of services with free calls and other packages that will boost small businesses in the country.
A statement from the company said Glo Mobile Enterprises is targeted at all SME segments including wholesalers, retailers, service-oriented companies, production companies, Non-Governmental Organizations, (NGOs) and individuals to propel them to higher productivity.
“Essentially, the packages are designed to lower costs, while increasing profits and values”, the statement said. Globacom assured that SMEs would get the best in market tariff plans with minimum rent and lowest call charges when they sign up for the Glo Mobile Enterprise.
Speaking on the package to the public, Globacom’s Executive Director, Adewale Sangowawa, said that growing the Nigerian economy has been a major thrust of the network and that the launch of Glo Mobile Enterprise is dedicated to the improvement of the economic situation of Nigerians, through the stimulation of SMEs. “Glo Mobile Enterprise is planned to take SMEs to the next level with the best in market.”
Who Gains, Who Loses?
A critical points analysts have continued to raise is if these operators can sustain the ongoing price war and for how long. Two scenarios have been put forward here: one is that as the price war continues, it may get to a point when the operators many not be able to sustain themselves and may have to reduce their staff strength, which portends loss of jobs for many. The second scenario is that it may get to a point when the operators would realise that with a further price cut, they would not be able to sustain themselves and would have to settle for a stable price.
Analysts have also noted that with such intense competition as being witnessed in the Nigerian telecommunications industry, dwindling revenue cannot be overruled, although none of the operators have complained of that in the public domain. But a key reflection of this is the industry ARPU, which has come to N1000 from N1800, and is projected to come down the more.
Of course, with the price war also comes increasing expenditure as the operators spend more on advertisement to announce their new offerings. This, obviously, is another burden which they have to bear as they struggle to gain market share.
On the other hand, subscribers in the country are actually in for good time as they are spoilt for choices with the various offerings coming with lots of freebies. Looking back to the early days of the telecoms revolution in Nigeria, one is bound to appreciate the level of competition in the industry as the basis of the growth in the industry. Many would never forget the earlier claim that per second billing was not feasible in mobile telephony. Of course, for the telecom-hungry Nigerians, this was still okay by them. But with competition, it is realised that per second billing is more than feasible.Almost eleven years down the lane, many Nigerians can actually say making phone call is cheaper than anything, thanks to the stiff competition. Unfortunately, phone call centers are gradually fading away. With the availability of lower denomination of recharge cards for as low as N50, many have ceased patronage of phone call centers, for with a recharge of N50 naira, they can make their call and still have some balance on their account.
This again, explains the exponential growth in the telecommunications subscriber base in the country, which has now hit the 100 million mark as more and more Nigerians see the need to have their own personal lines rather then using public phone facilities.
However, with low call tariffs and increasing subscriber base comes the thorny issue of quality of service, which is now giving the industry headache. At its wit end, the industry regulator, Nigerian Communications Commission had to recently sanction all the four GSM operators with a fine of N1. 17 billion, for their failure to meet up with the regulator’s performance indicators for service quality.
The operators in their defence have also cited several challenges such as equipment vandalisation, lack of adequate security for base stations, multiple taxation and other infrastructure deficiencies in the country as responsible for the poor quality service. They argued that in most cases, people steal generators meant for powering base stations, thus causing service disruptions, while they have also witnessed several attacks on their facilities.
To address these challenges, the telecom operators have repeatedly called on the Federal Government to declare telecom infrastructures as Critical National Infrastructure. Along this line is the issue of multiple taxation, which the operators say is also contributing to their inability to meet up with service quality. Most times, authorities shut down their base stations in demand for one levy or the other, which in turn cause service disruption.
Be that as it may, the regulator is insisting that its quality guidelines must be met, irrespective of the challenges. But even amid these, the operators may not be considering sheathing their sword of price war—for they see this as the master strategy to gain market share. In all these, subscribers will be at the receiving end as the war continues, because obviously, cost of telephony would continue to come down as long as the price war continues.
Again, with the proposed Mobile Number Portability, analysts believe that the war would soon shift from price to quality. This, essentially, will be for the good of industry, but then, its success will also depend on whether the current challenges have been addressed or not.
Elsewhere in Africa, the Price War continues
The battle for market share among telecommunications operators is not peculiar to Nigeria. In fact in the developed world, the industry is still battling with the same issue. In Africa, specifically, operators continue to lurk horns as competition gets tougher. These reports from select African countries say it all:
Telecom Price War in Ghana – Reading in between the Lines
Samuel Nii Narku Dowuona
There is a telecom price war going on in Ghana; it may not be a direct war in terms of drastic reductions in local call rates but in the form of tariff plans, which promise value for money.
But a closer look at, and comparative analysis of some of the plans would show they do not deliver any real value to the customer as promised in the loud ads and commercials, which are designed to cause people to rush into patronizing those offers long before realizing they are victims of marketing gimmicks.
When Airtel entered the African market last year, their group CEO in India made a promise that they would not engage in a price war in Africa. Just weeks after that promise, Airtel Ghana reduced their local call rates to 8Gp per minute for both on-net and off-net calls to mobiles and landlines at both peak and off-peak periods.
That one sneeze from Airtel has sent every telecom operator coughing; and the battle has even been severed by the launch of Mobile Number Portability (MNP). And speaking of MNP, it is gradually making nonsense of all the on-net call offers. With MNP one cannot be sure if a 020 to 020 call is necessarily an on-net call. It could as well be an off-net call if the second 020 had ported to another network without the knowledge of the caller.
Airtel itself has since the start of the tariff war, launched a number of offers; some giving as low as 4Gp per minute of calls to paired numbers in a double SIM pack on sale at Airtel.
Obviously, that 4Gp offer is for calls to only one number on Airtel and no other number. This clearly does not give much value to those who do not buy double SIM pack, and definitely not for those who do not call that paired number as often as they call others.
Airtel also has a Magic Number offer, for which one needs to register a special Airtel number and pay GHC2.99 every month to be able to call that number for free within that month. Again, this may not have much value for customers who call off-net numbers more than that one Airtel magic number. Some customers have numbers which they already call very often and those numbers may not necessarily be Airtel numbers. Some too do not even use up to the GHC2.99 calling that magic Airtel number in 30 days.
There is something called Airtel Magic Time and Magic Sunday, which are essentially limited periods within which one can make calls and pay only 4Gp per minutes. Again, the limitations kill the value.
But it still does not take anything away from the fact that Airtel gives great value in enabling customers to call off-net numbers for only 8Gp per minute; the most affordable default rate on the market.
The market leader, MTN is either the first to start something or first to flex some muscles after a competitor starts something like Airtel did. MTN responded to Airtel’s 8Gp offer by launching four new tariff plans and also subtly converting MTN Zone into a fifth tariff plan without telling consumers.
It is important to state that the default tariff for off-net calls on MTN is 12Gp per minute, which is over 33 per cent higher than Airtel’s.
But MTN Zone is a plan that could give customers as low as 1Gp per minute of call depending of the time of day the customer makes the call. MTN Zone is great, but MTN claims there are times when customers get 100 per cent discount (zero charge) on MTN Zone. This writer is yet to meet one customer who says he got zero charge on MTN Zone. Some speak of up to 98 per cent discount.
The1Gp on MTN Zone is between 5am and 8am in the morning. It looks very good on face value, but there is a clear limitation on when one can benefit, and the period given is when people are usually either sleeping, preparing to go to work, in traffic to work, or have just arrived at the office and preparing to start work so have little or no time to make calls. It would be interesting to know from MTN how many of their near 10 million subscribers use this flamboyant-looking offer.
Besides, that offer is only for on-net calls, but in these days of MNP, how can the subscriber tell that, that 024 or 054 number is really an MTN number? These are things MTN will not tell the customer and one calls, thinking they are making and on-net call, only to be told in a few minutes that “you have one minute remaining”.
But truth be told, MTN Zone may not have everything it is said to have, but it is a great tariff plan because this writer, like many others, has personally experienced 3Gp per minute call on MTN Zone on a number of occasions.
The other four tariff plans on MTN are Xtra Connect, So Cool, Talk a Lot, and Talk Biggest. For the first three, MTN gives between 9Gp and 6Gp for on-net calls, and maintains off-net calls tariff at 12Gp per minute. But usually those tariff plans are promoted with the on-net offers, and nothing is said about the 12Gp for off-net calls.
The confusion about these three plans is that they offer different tariffs for the first three minutes and then a different one from the fourth minute onwards. The question many subscribers ask is that “how does one know that he is being billed less on the third minute and lesser from the fourth minute?” In other words, why these confusing tariff plans, which do not yield to easy monitoring by consumers, particular in an industry where overcharging of tariffs is a big concern because automated systems are unreliable?
But the most interesting one is the Talk Biggest, which is very loud, but proves to be of no much relevance and value to any serious customer.
Talk Biggest offers 3 minutes extra on every GHC1 recharge for prepaid customers. So if a customer recharges GHC2 he gets 6 extra minutes, and so on. But the bonus minutes are valid for only one day and limited to calling one MTN number of the customer’s choice.
Customers who buy their credit through MTN unit transfer machines have their Talk Biggest bonuses accumulated over one week and they have the weekend to consume all that bonus credit calling just one MTN number or lose it.
So if one does not have any reason to call that one “special” MTN number within one day, or at the weekend, then one loses the bonus and MTN takes it back. The question then is what is so special about that offer, that it is called “Talk Biggest”? So many limitations and yet MTN has given it such a flashy name.
When customers raise questions, they are told “we gave you a gift, you did not pay for it, so we are telling you to use the gift at a certain time or within a certain period or lose it.” And customers are also asking “why do you call it a gift if you have all these limitations designed to prevent us from enjoying that gift?”
A similar strategy is being applied to the recent MTN offer of five free SMS’s for every 50Gp spent on MTN. The free SMS’s are accumulated to the weekend and the customer is expected to either use all of those accumulated bonuses over the weekend or lose it. How realistic can that be, and of what value is that kind of offer to customers if they cannot have the time to enjoy it at their own convenience.
Vodafone Ghana currently charges 14.4Gp per minute of local call. But Vodafone compensates for that with their Double Bonus and Double Value offers. Double Bonus gives all first time customers 100 per cent bonus on every recharge for their first three months on Vodafone. So, mathematically speaking, it works down to 7.2Gp per minute for both on and off-network calls on Vodafone.
Whereas other operators limit customers on what they can use their bonus credit for, Vodafone allows customers to use the bonus credit for local and international calls to all destination, browsing the internet, SMS, MMS and everything else. They also give customers seven days to use the bonus credit, whereas others give between one and two days.
Double Value on Vodafone allows customers who want to continue enjoying double bonus after the first three months to just register by dialing 5050 and paying GHC1.99 every 30 days to get 100 per cent bonus on every recharge from GHC2 upwards, and 50 free SMS’s to Vodafone numbers. On-net SMS cost 4Gp on Vodafone, so it means the GHC1.99 is actually paying for the SMS’s and the customer gets double bonus credit valid for a maximum of 30 days.
It is important to compare Vodafone’s Double Bonus to Airtel’s three months Double Value for new customers. Vodafone gives 100 per cent bonus on every recharge within the first three months, but the Airtel so-called double value for the first three months gives 100 per cent bonus only on the first recharge in every one of the three months. This means one gets only three bonuses in three months, whereas on Vodafone, one gets unlimited number of bonuses within the three months. What is Airtel up to?
Vodafone also has other tariff plans like Free Weekends, Extreme Value, Extra Value, and Supreme Value, some of which have similar features like the other networks have and there is no real value for the customers who want less money to do more.
Tigo recently launched their 007 tariff, which gives 7Gp per minute for on-net call, but retained off-net call tariff at 12Gp. Interestingly, an official of Tigo boasted that 12Gp per minute for off-net calls makes Tigo second to Airtel in terms of affordable off-net calls. But MTN is offering same thing, so what is the boast – don’t the telcos know what competition is charging?
Tigo also has a bunch of tariff plans including Triple Balance for local calls, Triple Bonus for IDD and on-net calls, Stop the Clock and Tigo Super Zone. Triple Balance and Triple Bonus are technically the same – they both give you 200 per cent bonus on every recharge, but the former is for local on-net and off-net calls only, whiles the latter is limited to international call to USA, China, UK, Canada and India, and on-net local calls.
The bonus credit is specifically for calls and nothing else, and the expiry date is two days for both offers. Again, the limitations interfere with the significance of the offer.
Stop the Clock allows customers to talk on-net for 10 minutes and pay for only three minutes, and off-net for five minutes and pay for only three minutes. That is not a bad offer at all, because it saves money either way.
But how many people talk on phone up to five minutes on regular basis? It would be great if they gave an offer in which the customer can save money right from the first minute.
Tigo Super Zone allows the subscriber to choose one location where she makes most calls. It could be the office, home, or school and calls from that location will cost as low as 4Gp; again, limited to one location.
The default rates on Expresso are 9.54Gp per minute for on-net calls and 14.88G per minutes for off-net, which is the highest in the industry right now. Until recently, Expresso (then Kasapa) did not have any part in the tariff war. But since they became Expresso, they have launched four new tariff plans called Shake Up. They comprise 1 Express, 7 Express, 30 Express and Expresso. Under 1Express the customer pays GHC1 and enjoys free calls to Expresso numbers, five minutes free off-net calls; under 7Express the customer pays GHC5 and for seven days gets free on-net calls, 30 minutes free off-net calls; 30Express offers 30 days of free on-net calls, and 160 minutes free off-net calls for GHC20, whiles Expresso offers free on-net calls for 30 days for GHC10. All four are great plans, but Expresso as an institution has not proven to be very competitive since they came into the Ghanaian market, probably because they are the only CDMA network. They have in fact been losing customers on monthly basis. So this is an example of when great value gets a weak marketing drive, as against irrelevant offers on some of the GSM networks, supported by powerful and aggressive marketing.
Glo has confirmed they will launch next month. They have promised to bring real competition unto the Ghanaian market. They have a record of giving free calls for one month to all new customers when they started in Nigeria. Whether they would do the same in Ghana or not, is only a matter of time. But beyond that, Ghanaians would look forward to a long-term value for money offer, and not the flamboyant t but irrelevant types that are on the market.
It is important that customers paid closer attention to the offers flying around from the telecom operators to see the irrelevance of most of those offers and separate them from the good ones like MTN Zone, Vodafone Double Bonus and Double Value, Expresso Shake Up, Tigo Stop the Clock and Airtels 8Gp across board tariff.
I must, however, say that in terms of value for off-network calls, Vodafone’s Double Bonus and Double Value are second to none. The rate on those two offers comes to 7.2Gp per minute of off-net calls and that beats Airtel’s 8Gp, which is the lowest default rate on the market right now.
Uganda: The Cost of Persistent Telecom Industry Price Wars
BY WALTER WAFULA,
The government and the telecommunications industry are bearing the brunt of the ruthless price war that was sparked off by Warid Telecom last September. Warid reduced its on-net calling rate by almost 84 per cent, to as low as Shs60 per minute from Shs360 per minute last year. The move forced its four main competitors to shake up their tariffs as they joined the price war to retain their customers and attract new ones. Subscribers have clearly been the biggest winners of this battle, not the main players.
A new market report by the Uganda Communications Commission (UCC) indicates that the growth in tax revenue from the telecommunications industry is failing to match the commensurate growth in usage. The revenue is also below the projected Uganda Revenue Authority (URA) industry contributions because of the heavy price cuts in the telecommunication industry.
Revenue contribution by the industry between July and December 2010 was Shs121 billion compared to Shs113 billion between January and June, the latest Post and Telecommunication Market Data Review by the Uganda Communication Commission (UCC) indicates. The Shs8 billion surge reflects a mere 7 per cent growth in government revenue from the telecoms compared to the 12.5 growth in service usage during the same period. The waning significance of industries such as the telecommunications has forced URA to tighten transfer pricing regulations and income tax regulations this financial year to boost revenue collection.
Further investigations reveal that the telecommunication firms are also bearing the brunt of their unsustainable tariffs despite the increase in usage of telecommunication services in the country.
Rapid Growth of Customers
Nonetheless, the war has spurred faster uptake of telecommunication services as it becomes cheaper for users to make voice calls. According to the report, the price competition yielded about 3.3 million new mobile connections between September and December last year. This is the highest quarter-on-quarter growth recorded since 2009, according to the study.
"This growth was attributed to major on-net tariff drops in October resulting into high incidence of multiple SIM ownership and traditional seasonal factors associated with the Christmas season," the report says.
As a result, Uganda's tele-density climbed to 41 users per 100 people at the end of December 2010, from 31 subscribers in September when Warid decided to slash on-net calls to Shs5 per second and later to Shs1 per second.
In total Uganda's mobile telephony customers climbed to 12.8 million from 9.5 million September last year. In comparison, the traditional fixed lines in the country grew to slightly over 327, 000 up from 213, 000. The price cuts also resulted in the growth of traffic albeit at a slower pace than in the first half of 2010.
Despite the growth in numbers, the operators are not generating enough money from their voice call services to run their related operations.
This is because most them are earning less from the services yet spending more to maintain their networks, pay staff and taxes amidst the rising cost of the dollar, transport and energy costs.
For example; the price of a call to another network by either Warid or Airtel is Shs180 per minute. But either company must pay Shs131 as the interconnect fee for the call to another operator for allowing the call to terminate its network. The firm then pays 21.6 as excise duty and Shs32.4 as Value Added Tax (VAT), to URA. The total cost of the call based on the three expenses is Shs185. This means that most telecoms are not making profit from off-net calls.
The off-net charge is insufficient to cover the basic distribution cost of airtime when broken down, according to Mr Edouard Blondeau, the chief officer, strategy and broadband, at Orange Uganda, a subsidiary of France Telecom Group.
"All players are pretty much aligned on the Shs3 per sec tariff for off-net calling therefore everyone is suffering," Mr Blondeau told Prosper in an interview last week. Yet, the price war has led to a 141 per cent growth in off-net traffic compared to the 22 per cent growth realised in the on-net traffic segment, the traditional growth leader.
MTN Continues to Dominate
Ideally, most calls in Uganda are either made to or from the MTN network. This means that unlike its competitors, MTN is raking in more interconnect revenue from its competitors besides dominating the on-net traffic revenue.
Despite losing voice market share to competitors like Airtel, Warid and Orange Uganda, the firm continues to dominate the mobile telephony industry on the back of its wide network coverage and value added services like Mobile Money transfers. In spite of its teething problems, up to $90 million is transferred on the MTN network by customers per month.
The operator charges at least 5 per cent per on mobile money transaction on its network. This means that the company makes in excess of $4.5 million (about Shs13 billion) from mobile money transfers alone. The revenue outweighs the profitability of some of MTN's competitors. Companies like Airtel have not posted a profit in the past three years although they have been praised as lucrative brands at the continental level.
Today, it's new age services such as mobile money transfers and utility bill payments that are assisting local telecoms to survive in the highly competitive business environment. Even then, they have to face the appreciating cost of the dollar, fuel and other commodities that are essential in business operations.
To end the uncompetitive price wars, in June, UCC moved to push telecom companies to quote sustainable and reasonable rates for voice telephony using the 2011 Retail Tariff Guidelines for Voice Telephony Services.
The proposed regulations will introduce a price ceiling of 70 per cent (Shs91.7) of prevailing interconnect rate, per minute call made on-net. Mr David Ogong, the director of corporate communications at UCC argued the rule is meant to wipe out predatory pricing practices among the players and ensure that the firms operate in a sustainable manner.
Tanzania: Price Wars Threaten Telecom Industry
BY SAMUEL KAMNDAYA,
Some mobile phone operators have expressed their dissatisfaction with the ongoing price wars, saying they may end up discouraging new investments in the industry.
According to Zantel, there are all signs that the ongoing competition may have far-reaching ramifications on telecommunication firms and even on consumers who will have to endure poor services instead of the much-touted benefits.
The war, which began with a Sh1 per second tariff almost four years ago, was rekindled last week with at least three operators dropping their tariffs to less than Sh0.5 per second. But the war may not have augured well with Zantel who believe the war may end discouraging future investments in the once fastest growing industry as well as lead to poor services to subscribers due to network congestion.
"This recent tariff decline has created a price war which will lead to reduced investment in telecommunications infrastructure, severe quality deterioration due to high network congestion and significant loss in profitability," the Zantel chief executive officer, Mr Norman Moyo, said in a statement. He said it was high time the sector's regulator investigated the sustainability of the reduced tariffs.
He therefore cautioned the operators to exercise restraint to avoid total value destruction, noting that the effects of the current massive price deductions would be felt in the next 18 months.
"The effects will be felt in 18 months as networks will get congested and consumers frustrated as they fail to utilize their mobile phones. In such a scenario, no investor will continue to pour money if the price goes below cost," he said.
According to Mr Moyo, situations like these have been noted in markets where operators are contemplating to sell their businesses and start to practice predatory pricing tendencies which lead to acquisition of customers for the purpose of increasing the value of their licence temporarily.
He, however, hastened to say that the comment did not mean that his company was doing poorly.
"The launch of the second submarine fibre cable - Eassy - has provided Zantel with the much-needed ammunition to increase internet penetration as the number of mobile phone subscribers go up significantly," he said.