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 Monday, January 24, 2011

­Kenya's Safaricom has warned that an ongoing price war between the country's mobile networks "cripple the industry". Safaricom Chief Executive Bob Collymore said that the price wars would cost the industry Sh26 billion in revenue this year alone.

Telkom Kenya chief executive Mickael Ghossein had earlier in the week voiced similar concerns, saying with low profit margins, operators would not see the point in reinvesting in infrastructure to up quality.The price war was sparked by Airtel, which recently took over the former Zain network and said that it had doubled its subscriber base to 4 million in less than six months. 

"We believe the industry will lose revenues of between Sh20-26 billion as a result of this," said Collymore. He said Safaricom was unlikely to follow Airtel in cutting tariffs. "That price is unsustainable, we are unlikely to move to that level because I have been charged with looking after the responsibilities of not just customers but also shareholders," Collymore said. He accused Airtel of putting Safaricom and the entire industry at risk through its strategy of offering calls at rock bottom rates.

Based on figures from last September - only a few weeks after the price cuts by Airtel - the Mobile World subscriber database reports that Safaricom is the market leader with a market share of 81% with Airtel (formerly Zain) coming in at 8.6%. Newer entrants, Econet had 7% of the market while Orange (Telecom Kenya) had 3.6% of the market.

Source: Cellular News