Wednesday, October 08, 2008

Closet Zain Users and the Vuka Phenomenon

What are the three most common things you expect to find in a Kenyan's wallet?
  1. National ID
  2. ATM Card
  3. Cash (if it's between 28th of previous month and 5th of new month).

I think that we can now add a fourth... a Zain sim card. The pink card from the Mombasa road fellows is now a must-have for any sophisticated mobile phone user (who probably are in the millions), even if it spendgs most time in the wallet.

For too long we have watched the rapid release of products from Celtel/Zain with the frustration of a teacher having to severally repeat a point to a dunderhead student. Uhuru tariff, Pamoja tariff, 6pm-6am 3 bob tariff, Unlimited talk time tariff, have all been excellent products in their own right, but not good enough to get a mass exodus from green to pink. However things may now be changing with the new Vuka tariff.

Vuka represents a brutal price war tactic on the part of Zain, intended to convert greens to pinks by making Zain the cheapest network to use, regardless of who you are calling. This price and Zain's superior network make the product a formidable challenger to Big Green's dominance. From the dramatic 1000% increase in the 073.... numbers now calling me, I think Zain is making inroads.

Should Safaricom be scared? At the moment I don't think so. As stated in my title, most of these new converts are closet users, meaning they only whip out the pink card when they are making the call, but keep their green card in the phone most of the time in order to receive calls. Because of this, most users will continue to give Big Green the bulk of their airtime shillings.

So does this means another wonderful Zain product dies an ignominious death?

It doesn't have to. This time, I'm going to jump in the pink corner and give Zain some unsolicited advice on two things they can do to make sure they finally get the market share they crave.

In giving this advice I've theorised that Zain's biggest problem is that Safaricom users, as much as they would like to vuka, fear that many people who are familiar with their Safcom number will be unable to reach them. So...

1. Instead of spending 1 billion shillings on advertising put that money and effort in lobbying for Mobile Number Portability (MNP) from CCK. MNP allows mobile phone users to retain their phone numbers when they move to another network (Even Safaricom acknowledges the risk to its earnings posed by MNP and warned subscribers to its IPO about it). Below is an extract from the prospectus under the headline "Risks relating to Company's Business and Industry"

In addition, the CCK has considered the implementation of mobile number portability (“MNP”) as a measure to reduce barriers to entry for new operators. Recently, the CCK announced that it does not plan to introduce MNP at this time. However, it is possible that it may do so in the future. MNP would permit the Company’s subscribers to change to another network operator
without having to change their telephone numbers.

CCK in the past has shown to be malleable in the face of constant pressure. Without a doubt, Celtel/Zain's hardest working employee was Claire Ruto, the former Corporate and regulatory affairs director who knew how to work the regulator (CCK) to Celtel's benefit. Its too bad they lost her to Safaricom because they can use someone like her for this task.

2. And hey, look if you can't get MNP to work, just use the 1 billion shillings to buy everyone a mobile phone, so that they don't have to keep their pink card in the wallet. With a good Chinese supplier you should be able to get 1-1.5 million phones, and tonnes of free publicity for the 'humanitarian' act. With time (hopefully) people will realize which is the better network and come out of the closet to Vuka completely.

5 comments:

GeorgeQs said...

1 bob orange!!!!

Abene said...

orange net is actually also really good. . .

startupkenya said...

today's daily nation must be good reading for Zain. Looks like CCK intends to implement the MNP, although the earliest might be September 2009

http://www.nation.co.ke/business/news/-/1006/489666/-/jhol17z/-/index.html

Anonymous said...

Nice post. Brings to mind a conversation i had sometime back with a senior engineer at an international firm that supplies GSM infrastructure. The man was quick to correct me (from an obvious point of knowledge) when I averred to the common impression that Zain has a 'superior' network to Safcom. According to my friend, Safaricom is way ahead of Zain in terms of infrastructure e.t.c, it just that they support way many more calls. Where am I going with this? If zain were to buy the public a million free phones from China, likelihood is that within no time, consumers would see a visible decline in the quality of their experience and their rock-bottom tarrifs would be exposed for the unsustainable gimick that they are

startupkenya said...

It looks like Airtel (formerly Zain) should have bought the phones instead. MNP seems to have fallen flat on its face. http://bit.ly/gmfXLI