Business
yuMobile and Orange departures could shake Kenya’s telecoms sector
Mr. Wanyonyi further advised that, “However, Airtel will also be interested, especially in the frequencies that an acquisition of Orange would provide, as well as the instant growth that such a move would mean. Airtel certainly needs the numbers to make a dent in Safaricom’s commanding market share, so there will be talks going on behind the scenes to that effect.” sa
Should investors should be concerned?
“While Kenya is not a large enough market for four operators, the presence of Yu and Orange helped to drive product and service differentiation, forced operators to innovate to stand out, and drove marketing and similar campaigns which in turn drove up revenues,” said Mr. Wanyonyi.
But, in a two-player market, this would not be the case. It is possible that the Quality of Service of the two main operators will fall further, with CCK apparently either unwilling or unable to administer anything more than a slap on their wrists. Consumers might be turned away from some of the two operators’ service offerings due to poor quality or high prices or both, leading to depressed earnings for investors.
For Safaricom, this is a big win. The new operators were meant to impact Safaricom’s dominance, but they didn’t make significant inroads. Airtel has been unable to make a good case of its business model in Kenya, leading to a poor performance and little, if any, impact on Safaricom’s customer base. But with the exit of yuMobile, the likely exit of Orange and the intact market position of Safaricom put yet more pressure on Airtel to innovate in an attempt to catch up.
Source: Biztech Africa
