Safaricom - Will It Withstand the Onslaught From Zain?

The mobile phone wars have been taken a notch higher with the slashing of calling and SMS costs by Zain Kenya. This has caused Safaricom to really evaluate its strategy and make a counter offer and that will keep in its huge number of subscribers. With over ten million subscribers, Safaricom controls about 80% of the mobile phone market and many pundits think that the current onslaught by Zain may reduce its market share. However, it must be remembered that Zain has attempted such a price war before but it wasn't very successful. It remains to be seen whether the current huge gamble is going to pay off. The other question on everybody's mind is whether Safaricom is going to retain its phenomenal profits that it has enjoyed in recent years.

With a profit of dozens of billions of shillings, the company is no doubt the most profitable company in East Africa. There is no doubt that the outgoing CEO of Safaricom, Mr. Michael Joseph, was a brilliant marketing strategist. Terms such as 'bamba 20','okoa jahazi' became everyday Kenyan terms thanks to his marketing genius. Will the incoming CEO maintain such a colossus on the Kenyan market?

The recent aggressiveness of Zain is attributed to the current owners, Bharti Airtel of India, which wants to target the rural mass market, the same market that Safaricom has traditionally targeted. In the formative years of the telecommunications industry in Kenya, Zain (then known as kencell) shunned this market and concentrated on the rich corporate clients. It now wants to get that market from Safaricom's grip. However, the wars could be potentially destructive as the mobile phone operators may choose to run losses for a while hence making the whole industry stagnate.