Africa Economy: Telecoms in Kenya battle for shrinking landline phone market

Telecom companies in Kenya have intensified fight for the landline phone market even as the number of people using the network dwindles.

The companies have come up with various incentives that include calling at low-cost across networks to lure customers to their side.

The battle is between Safaricom, Kenya's biggest telecommunication company, and Orange Kenya, whose predecessor Telekom Kenya pioneered landline (fixed telephone network) in the East African nation.

"Hang up on high cost landline costs," said an advertisement from Safaricom on Wednesday.

"Cut your costs and save thousands of shillings. Our landline rates are the best in the business. Why call less when you can talk more," added the company.

Safaricom has introduced a tariff where it is charging customers a flat-rate of 0.04 U.S. dollars per minute for calling within and outside the network.

On the other hand, Orange charges its customers between 0.07 dollars and 0.13 dollars to call within and outside the network. In the battle, the companies are seeking to lure mainly institutions, which still use the landline phone.

Statistics from Communication Authority of Kenya (CAK) indicate that as of September 2014, there were 192,778 fixed telephone service subscribers, down from 201,233 in the previous quarter.

The fixed telephone service is divided into two networks, namely fixed wire and fixed wireless lines. Fortunes for the two are on fast decline, according to the regulator's data.

"The number of fixed (wired) lines declined from 52,053 during the quarter to 50,018 in the quarter ending September. On the other hand, the number of fixed wireless subscriptions declined from 149,180 during the last quarter to 142,760 in the quarter under review representing a decline of 4.3 percent," said CAK in the report released last week.

And as the number of subscribers in the network decline, so is the traffic. The volume of fixed network traffic declined between July and September last year to 32.3 million minutes, down from 32. 7 million minutes.

Of the fixed telephone service subscribers, Orange has a bigger market share.

Interestingly, despite the drop in subscribers and traffic, revenue from the fixed line network rose during the quarter under review to 16.5 million dollars, according to CAK.

Safaricom, which overall has a market share of 67 percent against Orange's 9.2 percent, is thus keen on winning more subscribers from its rival.

Analysts are keenly watching how the battle for subscribers will shape up in the coming days.

"It is interesting that companies are going for a market that is shrinking, but this shows time is not yet up for the landline phone in Kenya," said Bernard Mwaso of Edell IT Solutions in Nairobi.

Mwaso said that most people who have stuck with landline phones in Kenya are doing so because the network comes with internet service.

The landline conjures interesting memories among Kenyans, when people would queue for hours at a single phone booth waiting for reverse calls or to make calls that never lasted for long due to expensive rates. Endi