Safaricom Dismisses Price Competition in the Ethiopian market

Safaricom has ruled out price competition in the Ethiopian market to lure customers away from Ethiotel, the country’s sole mobile services provider.

Instead, the telecom says it will keep its voice and data rates within the ranges of Ethiotel, the Ethiopian government-owned telco that operated as a monopoly before Safaricom’s entry last October.

“From a pricing perspective, our pricing strategy is generally to be either in line or just slightly at a premium, but not to go for any price competition. The intention is actually generally to be closer to what the main operator is offering, especially on voice.” Safaricom chief executive Peter Ndegwa said in a recent conference call with analysts and investors.

Safaricom was expected to offer significant discounts compared to Ethiotel pricing to make faster inroads into the 112 million-person country.

As it prepared for Safaricom’s entry, Ethiotel slashed mobile data tariffs by up to one-third and launched mobile money services.

Nevertheless, the telecom hopes to counter Ethiotel’s dominance in the country by aggressive marketing and to invest in steady connectivity, trying to replicate its success in Kenya.

The telecom launched in Ethiopia with promotional offers that included free minutes, data, and SMS. However, Dilip Pal, the telco’s chief financial officer, says this is only for a limited time.

“Given the launch and special promotion that we need to do, we continue doing that. But it’s for a limited period for customers to use, and then move into the commercial bundles and other services quickly,” said Mr Pal, Safaricom CFO.

Customers who sign up for the welcome offer receive 700 megabytes of data, 70 minutes of voice, and 70 SMS, all of which are valid for one month.

“Safaricom Ethiopia SIM cards cost 30 birr (KES 69), and subscribers pay 0.50 birr (KES 1.15) per minute for on-net calls and 0.12 birr (KES 0.28) per SMS, which are the same as Ethiotel rates. Off-net calls cost 0.75 birr (KES 1.73) per minute, and data costs 0.20 birr (KES 0.46) per megabyte. One megabyte costs 0.10 birr (KES 0.23),” Business Daily.