Essar Telecom Kenya Entrusts Yu Brand to Young & Rubicam Brands
Essar Telecom Kenya has signed a deal with Young & Rubicam Brands that consolidates all marketing communications activity behind the yu brand. Wunderman, a subsidiary of Young & Rubicam Brands, has handled yu’s digital advertising presence since it launched two years ago.
Speaking at the contract signing event, yu CEO Atul Chaturvedi commented: We expect to see our brand grow as all our communication efforts will now be consolidated under one group. Yu is a young, vibrant brand and we are looking forward to experiencing the expertise that Young & Rubicam bring to the tableâ€.
Young & Rubicam Brands Africa Chairman Chris Harrison said, We are delighted to rejoin the telecoms marketing at a time when brand equity is at an all-time low and the major players are resorting to price cuts. There is clearly a role for better differentiation in this sector and we are delighted that the senior team at yu shares this view. We believe that yu is strongly placed to be the brand of choice for a new generation of Kenyans. We are, and always have been, in the business of building great brands for our clients.â€
Mobile companies inks deal on number portability (Kenya)
Mobile phone users from April will be able to switch operators without losing their preferred numbers in a move that sets the stage for a fresh battle for control of Kenya’s competitive telephony market.
The country’s four mobile firms—Safaricom, Airtel , Essar’s Yu , and Orange have signed agreements on Friday allowing for the launch of the mobile number portability (MNP), as the switch is technically known.
The Communications Commission of Kenya (CCK) considers that the move will enhance competition in the mobile telephony market, adding that it could lead to a further drop in prices as players race to defend and grow market shares.
According to Charles Njoroge, the Director General of CCK, it is also expected to change the level of playing ground for the operators in the market. Changing subscribers’ numbers can be a major inconvenience at both personal and business level because telephone numbers are considered part of our identity, and any change would affect the circles of our friends, family and business associates.
This has been the major barrier for Safaricom subscribers to join rivals networks despite the operators offering lower rates, a signal that MNP is expected to change the competition landscape once again.
Under the MNP, subscribers will keep your number exactly the way it is, even if they move from one network to another, but they will have to inform their current and new operator of the switch. The subscriber will be required to surrender the SIM card to his or her provider and acquire another SIM card from the new service provider.
According to Atul Chaturvedi, the Managing Director, Yu, the service gives the consumer more freedom and ability to be more service oriented. Quality of service is going to play a critical role in attracting and retaining subscribers and with this service we have an opportunity to net disgruntled subscribers with our offers.
Safaricom disputes Regulator Report into Network Quality
Kenya’s Safaricom has disputed a quality of service survey findings published by the telecoms regulator last week, claiming that its own internal tests show its network is performing better than the regulator claims.
According to the company, a self-administered test undertaken using a methodology benchmarked by international standards gave it score way above what the industry regulator accorded it.
According to CCK previous reports, a countrywide Quality of Service (QoS) assessment on all the four mobile service providers gave Airtel the number one spot after it passed seven of eight parameters it used in measuring quality. Essar Telecom’s Yu brand was second, with compliance in four areas. The assessment found the quality of service offered by Safaricom and Telkom Kenya was the most wanting, with the two firms getting a score of three.
According to Safaricom chief executive, Bob Collymore, they are surprised at the timing of this announcement given that Safaricom and CCK were in discussions over the methodology used in the study.
While acknowledging that its network had issues, the company accused CCK for the poor quality network, claiming that the regulator had turned down its request for increased frequency spectrum that would increase capacity of its GSM network.
Collymore added that nonetheless, they recognize the challenges affecting our network, and they are working to ensure that all our 16 million-plus customers enjoy superior communication services.
Safaricom cuts international call rates by 90% (Kenya)
Safaricom, Kenya’s largest mobile telephony operator has slashed its international calling rates by almost 90% in an attempt to protect its market share after its competitions made similar drops in a move that looks set to further pile pressure on its profitability.
Safaricom reduced its international call tariffs to US$0.04 a minute from US$0.31 for calls made to USA, China and India, putting it at par with rivals Zain, Orange and YU.
Zain Kenya bowled the first round by reducing its international tariffs by 70% to US$0.04 per minute on October 1 to be followed by Essar’s Yu that reduced it’s by 98% to US$0.03 a minute later.
Orange followed the suit and on October 7 lowered its charges for the three markets to US$0.04 per minute from US$0.10.
US, China and India accounts for the industry’s largest international traffic, making calls headed to these market a key battle front for the operators.
As per the Analysts, the move by Safaricom will not hurt its earnings significantly given that international traffic accounts for a smaller share of its revenues.
According to Eric Kimathi, senior research analyst at African Alliance Kenya, Safaricom must have taken longer to negotiate with the rest of international operators for a termination rates, but we don’t expect the international price cut to significantly affect Safaricom. The company must, however, protect its share of the market and be at par with the competition, and ignoring any front will be costly at this time.
Safaricom’s rivals have operations in other markets and this made it easier for them to cut the international tariffs speedily compared to the market leader which only operates in the Kenyan market.
Airtel-Zain Rumbles in Kenya market: Slashes Tariff Rates by 50%
Bharti Airtel has announced its first aggressive pricing to the consumers in Kenya market, a first of its kind move by Bharti since its acquisition of Zain Group’s mobile operations in 15 countries across Africa. The deep cut in tariffs can have significant impact on customer acquisition and market share cannibalization in the highly competitive Kenyan market.
Kenya’s 20 million mobile phone market is the second largest operation of Zain acquired by Bharti Airtel. The low margin volume game that Airtel pioneered in India will help mobile telephony to reach the unexplored segments which still has significant potential as the mobile penetration in the market is still less than 50 percent.
KENYA MOBILE MARKET OVERVIEW:
-Four mobile players in the market i.e. Safaricom, Zain, Orange (Telekom Kenya), Yu (Essar).
-Safaricom has built a very strong proposition in the market with >70% market share and has managed to grow the market share gap with the competitors in past few years
-The slash in new tariff structure will help Bharti Airtel put significant pressure on the market leader Safaricom to protect their market share. The new Tariff structure will help Zain-Airtel penetrate lower income tiers.
-Safaricom will have to come up with a robust strategy to protect their market share as well as growth. It’s mobile money service M-PESA has been a tremendous success in the market with huge unbanked population with over 2 million users.
-Airtel-Zain holds <20% market share and has witnessed continuous loss of market share to Safaricom in recent times.
-Orange is the Third operator in the market, entered in 2008 when France Telecom brought Telkom, the incumbent. Orange can bring some aggressive pricing structure as well as innovative products to the market.
-YU (Essar) is the fourth mobile operator in the Kenya, launched in 2008 despite receiving license in 2004. Mainly targets 18-35 years audience with affordable pricing. YU will be under tremendous pressure with the new tariffs launched by Airtel as they have stated to be ‘the cheapest forever’.
Average minutes of usage (MOU) per subscriber for Airtel-Zain’s African Operations are still as less as one-third of Indian MOUs, and there is, therefore, the potential for exploring usage elasticity and replicating the minute factory model.
The Tariff slash move by Bharti- Airtel might be seen as a start to implement its successful ‘MINUTE FACTORY MODEL’ in the acquired African operations. The low price high volume model is ‘Minute led’ model compared to ‘Subscriber led’ models that were traditionally used in mobile industry.
‘Minute Factory Model’ is based on product/factory perspective considering ‘Minutes’ as a final product produced through a complex chain of outsourced units i.e. customer support, IT, Infrastructure, Network. Zain-Airtel focuses on selling maximum ‘Minutes’ produced i.e. Maximizing per minute profitability and adding additional capabilities as the demand raises. The beauty of the Airtel’s Minutes Factory is that it can add small capacities fairly rapidly and economically. The key to this is an array of partnerships & relationship that manufacture†the minutes for Airtel removing the burden of fixed cost.
As the Tariffs in Africa are relatively still high, one can expect several similar moves by the telecom giant in the other market to stimulate demand by cutting cost.
