Kenya’s Yu mobile initiates second round of mobile tariff war


A second round of  the mobile tariff war is looming in Kenya following an announcement by Kenyan  mobile operator Yu, the mobile phone brand of Essar Telecom Kenya Limited, that its promotion of on-net calls would be made permanent.

The promotion, which allows Yu subscribers to make free on-net calls daily between 6am and 6pm was scheduled to end next week, but according to Yu Mobile’s country manager Madhur Taneja, the calls will be permanent subject to regulatory approval.

The mobile telephony firm is also retaining its 50% SMS offer across all networks at a daily charge of Ksh 2, thus providing Kenyan mobile users opportunities to communicate at a low cost. “We are delighted to take the lead in making sure the calling rates in the market give best value for money to subscribers,” said Taneja.

“As we respond to the market demand in making communication affordable, we have been compelled to make this offer a permanent tariff, re-emphasising our commitment to always think of the consumer needs. The cost of living has continued to rise but we will continue to ensure the very best for subscribers,” said Taneja.

The firm currently has 1.4 million subscribers after it lost over 26,266 subscribers according to recent data from the Communications Commission of Kenya (CCK).

The firm suffered a drop in market rankings from 7.4% – 6.7% in October, while rivals Airtel and Orange grew their shares from 9.1% to 13.5% and 2.7% to 4% cent respectively over the period. In the same period, Safaricom’s market share dropped to 75.9% from 80.7%, but it gained 473, 979 subscribers.

With the latest development, mobile telecoms operator Yu said it is targeting at least Ksh2.8million every day following the introduction of a Sh2 flat-rate charge on subscribers within its network. “In addition, we are retaining the 50 cent per SMS offer across all networks at a daily charge of Sh2,” said Madhur Taneja, YuMobile Country Manager.

The move comes barely two weeks after Safaricom hinted at a possible review of its tariffs on the grounds that it was carrying a huge burden in increased network maintenance. Safaricom CEO Bob Collymore said the cost of running diesel-driven base stations had risen by 27% since January 2011.

By making the free offer permanent, yu has complicated Safaricom’s proposal to pass the rising costs of production to consumers, given that doing so will give Yu an upper hand on price competitiveness.

Call rates in the country came down by more than 50% in August last year after Safaricom’s rival, Airtel, under the leadership of former Airtel CEO Rene Meza, halved its rates to Sh3 (less than $1).