Ethically, mobile phone operators are wont to spread usage to the rural areas. However, this may not be commercially viable as penetration may not yield matching revenues. This means that the operators' core market, the urban areas, may already be saturated and future growth prospects minimised.
The competition for this market in Kenya has been especially heated and now resembles a Red Ocean with competitors going for each others' share.
The only logical way to sustain revenue growth is for operators to concentrate on improving services to this segment and explore ways to expand it.
Kenya currently has 4 service providers- Airtel, Orange, Safaricom and Yu. This is unlike other countries in the region that have upto 6 providers.
Leading CompetitorsSafaricom was first off the blocks in the industry and now has the lion's share of the market with over 70% of phone users on its network. Call quality on its network is satisfactory but its coverage like its competitors is limited to the densely populated areas of the country. In the northern region where insecurity is rampant, the 4 companies have shied away from erecting boosters and the available ones are few and far between Safaricom's media presence is more pronounced than its competitors and this is probably what has helped it maintain loyalty among its customers. Its management has also taken the lead in embracing the innovation and the company was among the first in the world to adopt and popularise mobile money-transfer technology.
In the early days of mobile telephony, Safaricom received healthy competition from Kencell Communications which is currently Airtel. Kencell's management had a very competitive and efficient media presence that is not matched by the current competitors. Unfortunately, the company has changed hands severally since then and this has inevitably affected its competitiveness. It now comes 2nd to Safaricom in terms of market share with less than 20%. It's also unfortunate that its call quality was previously regarded as the best in the country. It has also found itself lagging behind Orange and Safaricom in regards to the new frontier in the industry- provision of internet/broadband.
Sick Man of the IndustryOrange-Telkom is the sick man of the industry which is not surprising given its backing. Government backing more often than not means that good management is compromised by bad politics. It has all the resources to make it an industry leader and even has boosters in the remotest parts of the country but all its efforts to redeem itself always come unstuck. I t could have a monopoly in the remotest parts due to its CDMA technology but doesn't take advantage of that.It also has a monopoly in the landlines sector but its service here doesn't deserve mention in the 21st Century- most customers despaired long ago and discarded their old telephones. Another area it displays its lethargy is the broadband segment. Orange-Telkom has a potentially controlling stake in the fiber optic cable that connects Kenya to the rest of the world but won't use it. It's technical staff are knowledgeable and its back office skilled but bureaucracy can't let this company take advantage.
It recently applied for a government bail-out and was successful at the 2nd attempt. The rest of the competition doesn't seem to have the same financial issues but state-backed companies have seen a rise in cases requiring bail-outs. South African Airways recently applied for a bailout from its government after failing to meet its obligations.
Yu is the 4th operator and revels in market penetration pricing to gain market share- a strategy that seems to be working.
Airtel and Orange outsource their customer care departments and this is where they might be shooting themselves in the feet. Most of the outsourcing firms have financial troubles o their own. Their staff are demoralised, underpaid and have been in the spotlight recently after going on strike for unpaid salaries. Surprisingly, these 2 have skilled personnel expatriated from parent companies in more developed countries- India and France respectively but they aren't able to replicate their expertise into success in the local industry- at least not yet.