Budget Telecom Network model makes inroads in Africa

Posted on April 6, 2011  /  1 Comments

As predicted, the Budget Telecom Network model is reaching Africa. Predictably, management of the operators who were living the quiet life, are running to regulators to be rescued from horrors, actual price competition:

ARPU meanwhile declined at a similar rate across both regions – down 3% in Western Europe and down 3.29% in Africa. The African slide was triggered in part by price wars in a number of markets, particularly in Kenya, Tanzania and Egypt. Monthly mobile ARPU in Africa stood at $10 in the fourth quarter of 2010, compared to $10.34 a year ago. ARPU in Western Europe was $30.30.

“In Kenya, Airtel started a price war in August last year by slashing voice call rates by 50%,” noted Wireless Intelligence in its report. More recently market leader Safaricom in January lowered its on-network SMS rates from 3.5 Kenyan shillings ($0.04) per message to just 1 shilling ($0.01).

In Tanzania, fourth-largest mobile player Zantel – a unit of UAE-based Etisalat – in late February lobbied local regulator the Tanzania Communications Regulatory Authority (TCRA) to intervene in the country’s price war. The operator’s chief commercial officer Norman Moyo called on the watchdog to introduce guidelines to prevent dramatic price cuts.

Full story.

1 Comment

  1. Price war will always hurt the Operator. But regulating the same will create negative impacts on the industry and the penetration levels. Africa being a poor region which need boost Mobile service to support ICT4D, I hope will not make the mistake. Instead the regulator must look at creating a level playing field so that operators can foucus on competing on Product quolity and customer service. Well thats the ideal model. Hope they dont run into what we experience in SL.