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Kenya’s Safaricom resists tariff cuts to avoid price war
* Airtel Kenya slashed calling rates by half this week
* Collymore says bone marrow cancer now in remission
(Updates with CEO's illness)
By Duncan Miriri
NAIROBI, Aug 10 (Reuters) - Safaricom, Kenya's
biggest telecoms operator, has no plans to reduce its call rates
after rival Airtel cut its prices as it wants to avoid a price
war, its chief executive officer said on Friday.
On Thursday, the Kenyan division of Bharti Airtel
cut its call rates to all other networks to 2 shillings ($0.02)
a minute. The company said the new tariff amounted to a 50
percent reduction in prices. Safaricom charges 4 shillings a
"We are seeing a new price war coming," Chief Executive Bob
Collymore told reporters. "We are not going to move our prices.
If we lose market share as a result of that then that is fine.
We have to maintain a sustainable business."
Prasanta Das Sarma, the chief executive of Airtel Kenya,
said earlier this week the company had reduced its prices to
attract more users.
The new tariff "gives double the value to the customers as
now they can talk twice as much," Das Sarma said in a statement.
Collymore, who returned to work this week after a nine-month
medical leave, said he had battled acute myeloid leukaemia, a
type of cancer that inhibits white blood cell production, and
the cancer had gone into remission.
Safaricom, which is 35 percent owned by South Africa's
Vodacom, controls about 67 percent of Kenya's mobile
market, with close to 30 million subscribers.
The other big players are Bharti Airtel's Kenyan business,
which has a 19.7 percent market share, and Telkom Kenya,
controlled by London-based Helios Investment, with 8.6 percent
of the market.
Airtel's Kenyan business first went on the offensive on
prices in August 2010, when it slashed its call rates by 50
percent to 3 shillings per minute, forcing Safaricom to
introduce new tariffs as low as 2 shillings per minute.
But when Airtel cut its tariff to 1 shilling a minute in
January 2011, Safaricom held back and kept its prices constant.
That decision allowed Safaricom to invest in its network and
maintain its commanding lead, Collymore said.
In May, a draft report of a study commissioned by Kenya's
telecoms regulator recommended that Safaricom should offer
rivals access to its transmission sites and its network of
mobile money outlets to increase competition.
Airtel and Telkom Kenya want the report to be implemented.
Collymore told a parliamentary committee on Monday that his
company does not hinder competition.
($1 = 100.3000 Kenyan shillings)
(Editing by Jane Merriman)
First Published: 2018-08-10 08:37:51
Updated 2018-08-10 10:18:06
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