In the coming weeks, Nigeria’s highly competitive telecommunications market will witness sweeping squeeze in call-rate prices following Airtel Nigeria’s move to crash prices of mobile phone talk-time to as low as N9 per minute from the current industry rate averaging N35 to N42 per minute across networks.

This move comes barely two weeks after new owners, Bharti, acquired a substantial percentage of Celtel’s shares and re-branded in line with its mother company.

Rival firms were non-committal about what kind of response would be forthcoming but industry analysts say they see a huge specter of price war looming with Airtel’s unexpected move.

Analysts view Airtel’s move as strategic for market share as it intends to invite new subscribers on to its network and wrestle existing ones from competing networks. This, of course, will boost revenue in the long run as Airtel will enjoy better economies of scale through reduced cost per unit of delivering services as volume increases.

“This move is in line with Bharti Airtel’s promise to Nigerians to give them affordable telecommunications services.  We are indeed fulfilling that promise and we expect more Nigerians to come aboard Airtel”, a senior Airtel executive told BusinessDay in an interview yesterday.

Bharti Airtel, who took over mobile operations in 15 African countries in a deal that makes it the world’s fifth-biggest mobile company with 180 million customers in 18 countries, is known for its low-cost strategy which has made it India’s market leader. In India, the company’s call rate charges is as low as 1US cents as against the 20US cents charged in Nigeria currently.

The new owners, analysts say, are aiming basically to squeeze the current leadership of the market and this could force a new price war that has the potential of revolutionising GSM usage in the country.

In the past four months, innovative promotional schemes from telecom companies (telcos) have reduced prices of voice calls and internet download access by 50 percent. The internet download price slash has forced prices down to as low as N3,000 from N10,000 in less than three months with MTN leading the slash race. Industry experts believe the price will in no time drop to levels comparable to UK charges which is currently about N1,250 or 5 UK pounds sterling

Industry analysts thus strongly believe that the move by Bharti will force other operators to further review their present voice call rate in order to stay competitive.

Some analysts are however skeptical about the Airtel’s price strategy.

“In my opinion, I don’t think N9 per minute will be profitable for them considering the current interconnect rate. As you know, the difference between the price of voice call and the interconnect rate is what makes them profitable.

So, for instance, if the current interconnect rate is N10.12 and they intend to offer N9, then it makes no sense business wise. I believe this price reduction will be for on-net calls and not for off-net call”, one analyst who pleaded anonymity told BusinessDay.

Recently, Ernest Ndukwe, past executive vice chairman, Nigerian Communications Commission (NCC), told a gathering of Information Communication Technology (ICT) stakeholders that the Commission had laid the foundation for tariff reduction with the issuance of a new interconnect regime in December 2009. Interconnection rate represents the rate which a telecommunications operator who originates a call pays to another operator on whose network a call is terminated.

“I have continued to see tariff drop since the last exercise with respect to interconnect rates. Going forward, prices will continue to fall because we have always insisted that more competition will affect tariffs in a positive way”.

It would be recalled that in August, MTN Nigeria floated a new set of value added propositions which featured product offerings that allow customers enjoy more call time at a highly reduced cost across its market segments, causing increased competition among telecom players. For instance, customers on MTN Smartlink will enjoy retrogressive tariff plan which allows the customer to pay less for more time spent calling; voice call price could then fall to as low as 25 kobo/second from a peak 50 kobo, a whopping reduction of 50 percent.

In a swift reaction to the earlier strategic move by MTN which enticed teeming subscribers to its network with its new tariff plan (MTN Funlink, Smartlink, Prolink, Bizlink and Happilink), the fifth licensed GSM operator, Etisalat Nigeria, introduced a new tariff plan that allows subscribers enjoy lower rates of 25 kobo per second for voice calls from a peak of 50 kobo per second.

The unique selling point of the value proposition is that subscribers could make calls to anyone regardless of time, network or even location.

National operator, Globacom, launched a package in Port Harcourt that enables telecoms subscribers pay 25 kobo per second for all calls to any network in the country without any rental or access fee. In addition, the package, ‘Glo Infinito’ offers free midnight calls from 12 midnight to 5a.m as well as a bonus of between 10 percent and 20 percent for every recharge with N500 and higher.

http://www.businessdayonline.com/NG/index.php?option=com_content&view=article&id=16438:airtel-fires-fresh-shot-as-telecom-price-war-heats-up&catid=76:hot-topic&Itemid=564

Are any of you using Airtel? Can you please confirm the following?
> As a current user, do you get to call other Airtel users at N9/min? Additionally, what's the current rate that you pay?
> Is there any monthly fee that you need to pay for this?
> Have you been called by the company informing you of this?

Please keep me posted on this!

Thanks,
Vivek

Abi o! Let us knw what the issue is o!

Good news if its true.

They should also crash their internet bundle plans and stop hoarding their 3G Sims. It makes no sense for one to only be able to obtain the 3G sims at their offices.

wack jounalism

i think the N9 is going to be Airtel to Airtel, because connection fee (money telcom company pays to another telecom company) is N10.12 according to the article.

N9/Min. That is cheap 

despite the fact that Airtel's tryin to give other networks a run for their money, isn't it a bit too cheap for their bottom line, after all, they're in the business to make profit.
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I think it is very possible for this to work out, considering what the biggest player in the Nija telecoms market told us in 2001.
But I hope they will not go the way of Etisalat in terms of easy life and the resultant voice call quality and drop call rate.

A nice move in the right direction.
Competition will make all other telecom companies to sit up as regards charges and  eventually
quality of customer service.

Even if the rate is for Airtel to airtel then joining airtel is a good idea or one can wait
till his network joins the rates war.
All in all the customer gains; GOOD i say.

magnetx:

despite the fact that Airtel's tryin to give other networks a run for their money, isn't it a bit too cheap for their bottom line, after all, they're in the business to make profit.
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Even if on-net call is 5 naira, they will still make their profit.

Hmmmm sounds good, but , ok lets wait and see. Cos their network is getting bad by the day. Maybe they will use this as compensation for bad network

If they are charging N9/min and not 15k/sec then It can actually pay them. Correct me if I am wrong, but the interconnect fee is the fee for terminating a call on someone network. So if Etisalat is charging 25k/sec on a call to MTN that last 10 seconds, they will make N2.50 and owe MTN N10.21. But in that same scenario, Airtel would make N9 and owe MTN N10.21. And if the call goes over 1 min, then the interconnect cost is covered. Compared to the cheapest per second option on ground, they Will be losing money between the 36th/41st second and the 60th. The question becomes how many seconds does the average "less than a minute" user stay on the phone?

*disclaimer* I am not sure if my definition of interconnect fee is correct. If it is wrong, then please disregard.

I pray o !

there is no where in the article that says they will expand their network, what is the need gunning for more subscribers when u dont even have the network to cater for what u already hv? their first port of call should be to provide signals and good services first! because even if they reduce their call rate to N5, MTN wudnt give a hoot cos they have'nt got the network to handle the surge! on another note, this article SUCKS cos the writer didnt get his facts right before pouring his uninformed gibberish on NL.

for your info poster, all the new MTN packages are rubbish! i made the mistake of switching from xtra connect to this stinking Happylink( or shld i call it sad link?) only to discova that my family and friends dont work no more, i tryed switchin back to my old xtra connect, only to be told that , that package is no more available! my friend even went as far as paying 500 for the bundle only for them to swindle him! all that i have come across that have swithed to the nu packages, kip complainin!

The only part of the article i concur with is the Port Harcourt Glo 'Infinito' pckg. For all those living in Port Harcourt, go get a GLO sim now! i only use my MTN line for FREE browsing, that is why i still have one.  when i wano talk without fear, and also not having some anoying lady's voice at the backgrnd warning me that i have 1 minute remaining in the middle of my calls, I use GLO! they are the bomb! N15 to any network to any country baby! go get a GLO sim people,

'YOU HAVE ONE MINUTE REMAINING!!!, PLEASE LOAD AN ALL-IN-ONE CARD'
crazy 4ked folks!

Long prologue . . . let the main story begin!

we are improing

Glo infinito is available in 24 states of the federation,so u can still enjoy them around mostly the SS,SE,NC,NE,NW excluding abuja which is the capital

Per min or sec
Why won't they? When other service producers are taking over completely!!!!

Guys, if they start charging 9Naira it is not very bad, infact in India here where Airtel functions, calls are as low as 0.30Paise per minute(this is not up to 1Rupee), why will we Nigerians be suprised when they are willing to enter the market with that kind of concept/strategy??, pls don't spoil this guys mind ooo, i know MTN and the rest of the greedy dogs must have given them orientation not to do so but i know that the prayers of Nigerians shall be answered one day and God will send a Telecoms company that has the interest of Nigerians at heart,

happy new year!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I dey laf

I suspect that the PR is just being clever by half. There is a Zain ( now airtel) package that eventually drops down to 9naira per minute to any network called zain step-up.  You enter with a monthly rental of 1500 naira and are stepped up to a tariff of 35k per second  ie 21 naira per minute for the first 100 minutes which should cost about 2500naira with a certain code( I have forgotten it). Then you pay 25k per sec  or 15 naira per minute for the next 200 minutes ie about 3,000 naira bringing you to a total of 5500 naira and if you add the monthly rental, it brings you to a total of 7,000 naira. Once you cross the 300 minutes mark, your call rate drops to 15k per sec or 9naira per minute. In other words after you have spent 5,500 naira on calls and rented the package for 1, 500 naira, you now make calls at 9naira per minute. IMHO, it is a great package for heavy users. That is if you use 12,000naira and above in a month, you should go for it. It comes with other attractions of 100 free sms to any network, 100 mb for browsing and 35k per sec( 21naira per m,) call rate to some countries like UK, US,etc. However these side attractions except for the 25naira per minute calls to those foreign countries is a one-off thing. ie you get them only once. THe subsequent months dont have them. I personally think that it will make folks to be changing sim cards that is just 200 naira or thereabouts every month to enjoy those side attractions because the free  100mb for browsing and  100sms already are costlier than the 1500 rental fee.

Intending users should contact Airtel for clarifications as to whether these attractions are still there and other things.
For less volume users, I think that the best offer is glo in those 24 states they are available at 25k per sec without any rental fees. However,  places like Lagos and abuja where the glo offer is not available, the best bet remains etisalat easylife which offers the same glo rates but with a daily rental of 20naira ie a monthly rental of  about 600 naira.  I suspect that MTN will soon roll out there own attractions.THE OPTIONS ARE THERE FOR CHEAPER CALLS TO ANYBODY THAT MAKES THE EFFORT TO FIND OUT.

good to know that

Na wa o how many times this network go change him name from Econet to V-mobile then to vodaphone then to zain and now air tel na wa oooooooooo

9Naira per airtime minute with airtel, that's a welcome development to all Nigerians. let pray it come to accomplishment. meanwhile, which of the telecommunication network are most preferable in Nigeria?

They can circumvent the interconnect by dumping the calls as voip calls jare, they it out of naija to india and bring it back in. I am sure the guys that drafted our telecommunication laws did not think of that loophole.

This is not possible 9 Naira, it has to be for On Net calls. Cus i just recently dumped the So called Airtel for an Etisalat and i have been having the best of call rate since then. Maybe if its possible for them to make it a reality for us to make calls at 9 Naira to all networks then maybe i can join them, but never trust those indians they are as crooked as they look.

hehehe time will tell

Thank God that they want to do smthing in that regards, By the way this will make it 5 times of changing names! Are they chamelion?

i hope this is not April fool in December.

donobi:

i hope this is not April fool in December.

Abi oo true talk