Newcomer Orange to Break Safaricom’s Stronghold on Kenya’s Market?

Monday, 22 September 2008

The entry of a third mobile operator in Kenya’s market will be closely watched. What are the key points that will define the competition? Even though mobile operator Zain (former Celtel) is part of a very successful telecoms group in Africa and the Middle East, its performance in Kenya had been disappointing, to say the least. Despite a number of innovative products, the company had, in fact, been losing market share in 2007, and it is still not clear whether the high-profile launch of the new Zain brand and several changes in the management of the Kenya operation will be able to reverse this trend. Safaricom, with an estimated market share of more than 80%, continues to sit pretty in Kenya. The entry of a third mobile operator will be closely watched: Will they succumb to the same problems that Zain had? Will they finally offer some serious competition to Safaricom? Will their entry energise Zain? France Telecom won the bid to acquire 51% of Kenya’s Telkom at the end of 2007 and has now launched its Orange brand with an integrated services offer (Kenya: Press Release: Telkom Kenya launches Orange Brand with Full Range of Communication Services ). According to the new management, Telkom Kenya currently has 600,000 customers across all services, and the company targets 1.5m in the first year. The Orange brand launch also introduced the mobile service in Nairobi and Mombasa, and the company aims to cover all major towns in Kenya by the end of 2008. However, through the company’s other services, nation-wide coverage has already been established. Some of the issues to watch:   •    Integrated Services: In contrast to its competitors, Orange can draw on the full range of services that Telkom was already offering its customers – mobile, fixed line and internet. Telkom had introduced the wireless CDMA technology to supplement their fixed line network. Zain and Safaricom have both introduced internet services through portable modems, but Telkom Orange claim to be the only provider who offers real broadband. •    Quality: In the immediate future, Orange will only run the wireless network under its brand. The fixed line network, as a result of years of neglect and vandalism, does not yet meet Orange’s quality standard. As new CEO Dominique Saint-Jean stated, Telkom would have to both improve the physical infrastructure and retain the trust of customers before integrating it into the Orange range of services. Can they live up to this quality focus and extend it throughout all services?   •    Customer Service: In their launch presentation, Orange executives placed a lot of emphasis on their intention to offer superior customer service. If they manage to fulfil this promise, they will certainly earn bonus points from customers: Not only is customer service generally a headache with most service providers in Kenya, but it is also an area where Safaricom has been less than distinguished, especially in their prepaid service. Orange have outsourced their customer service to Kencall, a local call-centre company, which is encouraging. However, it remains to be seen whether the interface between Kencall staff and Telkom is sufficiently well established to resolve customer complaints. •    New products and services: Even though they are trying to keep a very low profile with this service, Safaricom’s M-PESA mobile money transfer service has been a milestone. Similarly, the removal of roaming charges within Zain’s entire network across Africa and the Middle East had been a global first. Both companies have tried to match the competitor, with Zain introducing Sokotele money transfers, and Safaricom signing agreements with other operators in the EAC to mimic Zain’s One Network. Orange is expected to launch Orange Money, a service currently being trialled in Cote d’Ivoire that allows transfers as well as bill payments and payments to retailers. In addition to confirming that Orange had signed the usual roaming agreements, Sain-Jean also alluded to a not yet specified ‘special offer’. This indicates that both Safaricom and their parent company Vodaphone as well as Zain have set new standards that other companies feel some pressure to live up to. •    Regional expansion: Saint-Jean was guarded on the details, but stated that Orange did indeed consider Kenya a regional hub from which new country operations in the region would be launched. Zain already has operations throughout the EAC, and Safaricom has signed co-operation agreements with other operators. •    Local branding: The use of a pan-African campaign and art work turned into a headache for Zain: As Safaricom CEO Michael Joseph already noted, Kenyans are ‘peculiar’, and one of these peculiarities was that the Kenyan public disliked the models in Zain’s campaigns as ‘not Kenyan looking’. Seemingly not a very substantial issue, it has nevertheless cost Zain – and Safaricom’s more pedestrian art work has served its purpose well. Telkom Orange management stated that while they would respect the global format of the brand, it would be adapted to the respective local environment. Share this article with others: Comments (0) Subscribe to this comment's feed Write comment Show/Hide comment form Name Email Title Comment smaller | bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Add Comment