Safaricom has ruled out price competition in the Ethiopian market to win customers from Ethiotel, which was previously the only mobile telephony company in the Horn of Africa country.
The telco says it will instead keep its prices for voice and data within the ranges of Ethiotel — the Ethiopian government-owned telco that operated as a monopoly before Safaricom’s entry last October.
“From a pricing perspective, our pricing strategy is generally to be either in line or just slightly at a premium, but not to go for any price competition,” Safaricom chief executive Peter Ndegwa said in a recent conference call with analysts and investors.
“The intention is actually generally to be closer to what the main operator is offering, especially on voice.”
There was an expectation that Safaricom was going to discount significantly against the Ethiotel pricing to make faster inroads in the Horn of Africa country that is home to 112 million people.
This is after Ethiotel slashed mobile data tariffs by up to one-third and launched mobile money services as it prepared for Safaricom’s entry.
But Safaricom hopes to counter Ethiotel's dominance in the Horn of Africa country through aggressive marketing and investing in stable connectivity and replicate the success it has achieved in Kenya.
The telco was able to overtake Airtel Kenya and Telkom Kenya in the local market through sustained investment in infrastructure and innovations such as M-Pesa.
Safaricom launched in Ethiopia with promotional offers that saw it give certain minutes, data, and SMS to customers. However, the telco’s chief finance officer Dilip Pal says this is for a limited time.
“Given the launch and special promotion that we need to do, we continue doing that. But it's for a limited period for customers to use, and then move into the commercial bundles and other services quickly,” said Mr Pal.
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 ($0.56) and subscribers pay 0.50 birr ($0.009) per minute for on-net calls and 0.12 birr ($0.002) per SMS — all three being the same as Ethiotel.
Ethiotel, however, charges 0.75 birr ($0.014) per minute for off-net calls and 0.20 birr ($0.003) per megabyte data. One megabyte of Safaricom is priced at 0.10 birr ($0.002).