Safaricom Plc - Dialing the wrong number - October 2018
Voice Calls - “Dialing the wrong Number” is the 2nd part of our 6 part series report titled “Is Safaricom losing its grip?”
In the 1st part - “Pricing Power Explained” we explained the concept of “pricing power” which we defined as the ability of a company to raise prices over time without reducing demand for its products.
We used the Herfindahl Hirschman Index (HHI) theoretical framework to determine the each business line’s concentration levels and mentioned in brief the services in which Safaricom has or does not have pricing power.
In this report, we conclude that the voice call market is highly concentrated by analyzing voice call traffic market share with Safaricom clearly the dominant market player.
However, it does not hold pricing power as recent tariff adjustments by other mobile operators has resulted in a significant loss of market share as customers are highly price sensitive.
A brief comparison of prepaid voice call tariffs shows that Safaricom is comparatively more expensive than its competitors and this explains the loss of market share in recent months.
The negative impact of Over the Top Services (OTT) such as skype, Facebook messenger and other data driven mobile device applications on voice calls traffic has also been mentioned.
Finally, we conclude by showing the impact of loss of market share on voice call revenues. Download Report