Telecominication market price competition in Ethiopia

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 Safaricom rules out price war in Ethiopian market
















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By Cck
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Safaricom has ruled out price competition in the Ethiopian market to lure customers away from Ethiotel, the country's sole mobile telephony provider.

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

"From a pricing standpoint, our pricing strategy is generally to be in line or slightly at a premium, but not to go for any price competition," Safaricom CEO Peter Ndegwa said during a recent conference call with analysts and investors.

The goal is to be closer to what the main operator offers, particularly in terms of voice."
Safaricom was expected to offer significant discounts compared to Ethiotel pricing in order to make faster inroads into the 112 million-person country in the Horn of Africa.

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

However, Safaricom hopes to counter Ethiotel's dominance in the country by aggressive marketing and investing in stable connectivity, replicating its success in Kenya.

Through sustained investment in infrastructure and innovations such as M-Pesa, the telco was able to overtake Airtel Kenya and Telkom Kenya in the local market.

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

"Given the launch and special promotion that we need to do, we continue doing that. However, customers will only be able to use it for a limited time before moving on to commercial bundles and other services," Mr Pal explained.

Under the Safaricom welcome offer, customers get 700 megabytes of data, 70 minutes of voice, and 70 SMS all valid for one month.

Safaricom Ethiopia SIM cards cost 30 birr (Sh69) and subscribers pay 0.50 birr (Sh1.15) per minute for on-net calls and 0.12 birr (Sh0.28) per SMS — all three being the same as Ethiotel.

Ethiotel, however, charges 0.75 birr (Sh1.73) per minute for off-net calls and 0.20 birr (Sh0.46) per megabyte data. One megabyte of Safaricom is priced at 0.10 birr (Sh0.23).

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