Price war set to erupt as new telco pledges cheaper rates

A fierce voice and data price war is in the offing with the announcement of lower tariffs by a US-based Kenyan telecommunication firm expected to launch its services within the next two weeks.

GeoNet, which was initially registered in Delaware USA in 2000, is currently piloting its services locally and says calls within its Geosafari network will be free while calling rival networks — Safaricom, Airtel and Orange — will be Sh2.50 per minute.

The cost of Short Messages Services (SMS) locally will be Sh1 while sending to any international number will be Sh2.

Safaricom charges Sh4 within its network and rival networks during peak time and Sh2 on-net and off-net during off-peak hours. The leading mobile provider charges Sh1 for sending text locally and Sh10 for international SMS.

Airtel charges Sh4.02 for calls within its network and other rivals on its Vuka plan. It also has two other offerings, ‘fleenga free’ and Klub254 where charges are between Sh1.2 and Sh4.02 per minute .

The price battle is expected to be fiercer with inbound international calls. The firm said it will charge Sh5.50 per minute for any international calls to Kenya made through GeoNet platform.

Currently, it is cheaper to make international calls from Kenya than when one is calling home from abroad. The charges while roaming outside East Africa by the three mobile operators’ ranges between Sh10 and Sh20 per minute.

GeoNet Communications Group CEO Peter Maina said the firm’s platform is on an Open Source software, and operates similarly to WhatsApp, enabling it to offer services at much lower prices.

“Technology can really help bring prices down. It is real.

We are not cutting prices because we want to enter the market. Even by charging Sh1.50 we are still making 300 per cent profit,” Mr Maina told Smart Company in an interview.

He said the firm will bring the prices of calling local networks from abroad using the Geosafari to Sh5 once the firm has reached an interconnection agreement with the three firms as required by the law.

At the moment, although a Geosafari subscriber can make calls to each other and to either of the three mobile firms, subscribers of the three operators cannot call Geosafari due to lack of interconnection agreement.

GeoNet offer its voice and data services through the Voice over Internet Protocol (Voip) through an app currently available in Google App store and Apple Store.

MOBILE MONEY

This technology also requires users to have data bundles from the mobile network operators. This means the users must be on a data plan or be where they can access free wireless Internet (Wi-fi) to use the Geosafari app.

Mr Maina said the firm is at an advanced stage in integrating its network to the Safaricom M-Pesa system that will enable users top up directly through the mobile money platform.

On inquiry on the effect the entry of GeoNet will have in the local market and how they will react, players and the industry regulator cited an ongoing case at the High Court.

“We are unable to comment further on this matter as it is the subject of an ongoing court process.” Airtel Kenya CEO Adil El Youssefi, wrote in his response.

Citing the court case, the Communication Authority did not give details on the matter only saying the company has already been cleared to trade and pointed to conditions on the licence which were not clear if the new entrant had met.

GeoNet Communications Ltd are already licensed to roll out domestic as well as international systems and services for both data and voice. All licences are however subject to certain technical and operational terms and conditions,” CA noted in their response.

GeoNet started as a self-help project for Kenyans in the USA in 2001 aiming to tap into ICT technologies to reduce the cost of calling Kenya from North America, Europe and Asia. The company is 78 per cent owned by Kenyans and 22 per cent by American.