[November 17, 2009] Essar Lowers Cross Network Tariff, Buys Into Firm Tweet Nov 17, 2009 (Business Daily/All Africa Global Media via COMTEX) -- Essar has lowered its cross network tariff and made an acquisition in Uganda as it seeks to boost its regional footprint. The telecom firm, which operates under the brand name Yu in Kenya, lowered its cross network calling rate from Sh7.50 to six shillings per minute in a bid to attract subscribers. The move is significant in that the charge is lower compared to what its rivals Safaricom and Zain charge within their networks. They both charge Sh8 per minute and Essar hopes the new price will help it woo subscribers from other networks. The firm has been having difficulties growing its customer base despite its cheaper call rate of Sh0.50 per minute within its network. "If you look at the typical call patterns of the average Kenyan, the average call rate in the market is close to Sh10. "This initiative will give the consumer a saving of 40 per cent on their call rates," Mr Kunal Ramteke, Essar Telecom Kenya's chief commercial officer, said on Monday. The firm is also betting on its yet to be unveiled lower regional tariffs to hopefully help it grow its market share, which stands at about three per cent, according to Renaissance Capital. Safaricom's share stands at 78 per cent, Zain 13 per cent, and Telkom Kenya six per cent. The lower regional tariffs will be brought home by Essar's acquisition of a 51 per cent stake in Warid Telecom Uganda and Warid Telecom Congo for $160 million (Sh12 billion). Low rate of six shillings The move will see Kenyan subscribers make calls to these countries at a low rate of six shillings. The firm has entered into an agreement with other telecommunication operators to offer its services in these countries. Essar chief executive officer East Africa Srinivasa Iyengar said subscribers will now have a better deal while calling into these countries compared to what they currently have. However, he could not give a specific time frame saying that it is too early to conclude. "Our subscribers are currently paying close to a dollar (Sh75) per minute for roaming charges, but this will reduce to the level of local rates," said Mr Iyengar. Essar becomes the third mobile company to put its footprint in neighbouring countries. Others are Zain and France Telecom that operates Telkom Kenya. Acquiring the firm will give Essar an opportunity to run a seamless network that will not only help subscribers call across the region but also cut cost. Roaming is the ability of mobile phone subscribers to use their mobile phones when they are travelling outside their countries' networks. This is made possible by using the host country's network resulting from earlier agreements between mobile service providers. Unlike roaming services, a seamless regional connection does not attract additional charge for either receiving or calling while in another country. Pricing is emerging as a weapon for growing subscribers and profitability. The local Essar outfit has lacked the competitive edge in a head to head battle with rivals Safaricom and Zain for the regional market. The need for regional connectivity is expected to rump up efforts to ease trade and movement of people in Eastern, Southern and Central Africa. Free movement The East African Community (EAC) is moving towards creating a common market that will allow free movement of people, goods and capital in the five East Africa countries while Comesa has created a custom union. This is set to increase the movement of people across the region and local mobile telephony firms are increasingly looking at making it easier for subscribers to communicate across the region at no additional costs. Zain was the first firm to jump at this opportunity in 2006, helped by its regional operation that spans 12 African countries and five countries in the Middle East. Safaricom was to follow suit, but because it did not have the benefit of regional subsidiaries the firm signed interconnection agreements with rivals Zain in Uganda, Rwanda and Tanzania. In Uganda, it hooked up with MTN and Uganda Telecommunication Limited (UTL) and Vodacom and MTN in Tanzania and Rwanda respectively. France Telecom, which entered the mobile telephony market last year following its purchase of a 51 per cent stake in Telkom Kenya, is also planning a similar interconnection after it bought a majority stake in Hits Telecom, a mobile telephony firm based in Uganda. [ Back To TMCnet.com's Homepage ]