The Trouble with Celtel

Are free calls enough?

[I am not a customer, but I have probably bought and discarded three of their SIM cards to coincide with some ongoing promotions. Too many people I call are on Safaricom, and until number portability comes along, (carrying my number to another network) I am stuck with Safaricom.]

Beside number portability, there are other things they need to sort out; Celtel has been losing customers (23% down from a year ago), executive staff (compared to the ‘stable’ team at Safaricom and direction. The change of brand from Kencel to celtel to Zain only benefits paint and marketing companies (but there’s already a ‘Z’ brand in Tanzania and a couple of other African countries)

My biggest peeve with them is there are too many products; these are never promoted long enough to mature or register with subscribers and potential customers.

This week
– For internet/data users – they have Uhurunet – unlimited internet service, whose equipment is a USB modem costing 6,000 shillings [$95] and 3,000 [$48] per month for unlimited internet which is not bad [and this compares well against Safaricom]

– For callers: Earlier this week they launched a six-month tariff with free airtime for people who purchase cheap phones (targeted at rural subscribers). And now from the skunkworks group we learn that they have another new tariff with Free calls from 6 a.m. to 6 p.m. every day (top up with 100 shillings to take advantage) – will this be the one that gives them an edge over Safaricom? That’s the problem with Celtel – great products, big marketing budget, but jumbled messages that confuse subscribers. In the last year they have advertised their lowest rate at 6 shillings (Mambo 6), 4 shillings (to 3 preferred numbers) and now 3/= ($0.05)per minute. That is three times cheaper than Safaricom, but who has the masses and who has the right message?

Other tales

Opportunity: Nominate a worthy Kenyan to the Generation Kenya program

– From Uganda and GTV comes pre-paid premium TV – subscribers can pay for their GTV pay TV packages using scratch cards

Experian Kenya: joining the Kenyan credit reference pool is Experian in partnership with Quest Holdings.

Day 19 of the Safaricom IPO has 4,121 deals, worth 342 million ($5.42 million) Closing 7.20 High 7.40 Low 7.00 Last 7.20 and volume of 47.5 million shares. It’s well supported and Buyers must be sniffing out a conclusion to the de-leveraging process. Commentary and data from – NSE data vendor [with Free real time prices between 0930 -1500]

13 thoughts on “The Trouble with Celtel

  1. Maishinski

    I hope Celtel does an IPO, then Safcom would do a hostile takeover of celtel and teach them a thing or two about Kenya.

    If I was MJ I would talk to the Arabs in Kuwait / merali to enable safcom to acquire a controlling stake in Celtel/Zain.

    Econet can be ignored. Raising adequate Capital has proven to be an effective entry barrier for them.

    Telcom/Orange wants to land with a bang… hmmm… can you turn around a dinasour? Reminds me of Railways: there was so much hype with Railways Concesionaire – but now they’re almost throwing in the towel!

    If I was that new French guy, I would spend the first year removing cockroaches from Telkom before I even think of going head-to-head with an established giant like Safcom.

    Financial muscle is not unlimited; I bet France telcom will not hesitate to pull the plug if they see a classic loser.

  2. coldtusker

    Well… the issue is ‘stickiness’… I moved to Celtel but I kepp SafCon for folks like you…

    NEVERTHELESS I have seen people move over esp the higher spenders… why?

    SafCon is expensive @ 10/- so moving to Celtel easily helps defray the cost of a new basic handset for someone who uses 200 minutes pm…

  3. Anonymous

    I think to say that the Celtel Unlimited internet “this compares well against Safaricom” is to e unfair to Celtel.

    The equivalent unlimited service on Safcom may cost 1k less but is LIMITED to 700mb.

    700mb is ok for mail but if you need more, forget it. 4 hours surfing of blogs, news, music sites maybe some music downloads and you’re easily 30mb.

    I use the Celtel unlimited and my is it a joy! in fact when pals pass my place they have to check their email coz its always on… and no bandwidth restriction!

    For medium to heavy users, Celtel is a no brainer.

    The speed is the same on both, forget about the 3G rubbish maneno…3G only means that your connection to the Safcom office is fast but from there to the internet, Celtel and SafcoN restrict you to a slow satellite connection. Put another way, your connection is only as fast as the weakest link.

    This is a great product from Celtel, i hope they keep buying more bandwidth as more users come onboard.

    For Orange, this is their biggest and most promising opportunity in sub-saharan Africa, their jewel in the crown within the region. They will throw money like mad … or even like mud :).

    PLUS, they know telecoms inside out… expect the word i hate “triple-play/quadruple play”… y don’t they just call it “menage a trois”!?

    @Coldtusker: I agree, poeple are moving not super-fasrt but certainly its happening. Have you noticed the way vendors are selling Celtel cim-cards all over the place, even petrol stations…

  4. coldtusker

    anon – I used bambanet for 2 months – early adopter… hated it… it was unreliable and 700MB ain’t much.

    So I went to Celtel but the buggers were out of modems!

    P.S. I have a used bambanet modem going cheap!

  5. MainaT

    Good debate guys.

    Celtel have certainly tried everything but buying Safcom to compete with it. Celtel seems to be doing a new product every month, good because it keeps it in the news, bad because its called product confusion i.e. what do you do if you opted in on the previuos product promotion? Will you as a customer keep on chaning sim cards every month? Isn’t better internet access related to having fewer customers?

    Orange has its work cut out and I expect this to go the same as the wireless thing. Exciting for a while, but sobering thought on costs.

  6. Gitts

    Their uhurunet is good but safcom 3G is way faster. Edge works for normal tasks but once you start doing things like youtube it’s too slow!

    you got it right celtels maketing is a mess. there have been so many offers the past two years. let me count-uhuru tariff Jipange (whatever happened to that? was a good idea mixing pre and postpaid), shuka shuka, mambo 6, Pamoja, 3 bob and now the free calls thing.

    Good products poor follow up. Another thing is they don’t market well, do you know that me2u was actually launched before sambaza but safcom did a better job of promotion. Another thing is jaza jaza which to me is a killer product but Where are the vendors?

    Another thing is that they don’t update their website regularly. a month after launching pamoja, nothing on their site!

    However they’ve got a good PR guy in mMichael Okwiri, done lots of work in Kenyan companies with his last one being KQ so he knows his way around.

    About staff movement- that is a fact of life. Every now and then companies reposition themselves strategically and have to change management. Another major Kenyan co is going through such a phase too.

    All in all is going to be a tough battle ahead in the telcoms sector in Kenya for all involve. I’m really waiting to see what orange have to offer as Econet look like the underdogs.

  7. bankelele

    Maishinski: Maybe that could happen after Orange establishes itself and challenges for No. 2 ( At skunkworks we were told they will bring the I-phone to Africa- officially)
    – stories about Econet are as old as this blog
    – RVR have a monster task running the railways, but maybe they could have done more

    Coldtusker: Actually voice calls are not that big a deal to me. I estimate that 1/3 of my airtime goes to phone web browsing, 1/3 to SMS – score on which Safaricom is arguably as cheap as (and perhaps better than Celtel). Plus with more payments being processed with M-pesa, I can’t see the need for a switch

    Anon: I only browse on my phone, have never bough the modems’ so I’ll take your word – see Gitts comments

    MainaT: Safaricom have had their tariffs (taifa, tariffic) for years, they rolled out new ones (which chape?) last year, and retired the old ones. Celtel just keep rolling them out, hit or miss

    Gitts: Going by the skunkworks discussions, this data debate has no correct answer on who wins between celtel and Safaricom modem users – except that ISP’s are the losers
    – best wishes to Michael Okwiri at celtel (and whoever replaced him at KQ)

  8. Adam23

    Any ideas on the Safaricom stock going forward,after a falling week. I was expecting to see Rich’s commentary for the stock – end week. What is the vibe in the Kenya market? Where are we heading with this stock?


  9. Peter Njenga

    I agree with Anon that the Celtel unlimited Internet offer at Ksh 3000 per month is better than Safaricom’s 700 MB limit charge. Additional use with Safcon attracts Ksh 12.60 compared to Celtel’s Ksh 10 per MB for prepaid internet.
    Problem with Celtel is that they never let the marketing of any of their products mature, yet they have the money to spend.
    Another problem, their site is never up to date. The Celtel Kenya site: is usally down too. Like right now. Just try!

  10. Maishinski

    Celtel’s Mistake is trying to battle it out for the “Numero Uno” slot instead of filling up the VACANT position of NUMBER TWO!!!

    when Telkom steps up, whoever’s not Number 2 will be Number.. last (irrelevant for the foreseeable future)


  11. Anonymous

    Hi Banks,
    Whatever to Aly’s commentary on Safaricom. Haven’t seen any since last Thursday….am interested to know what the current take is on this stock. Is it a hold or sell?

  12. Dark Angel

    Having used Safaricom Globetrotter, Samba and then ‘graduating’ to Bamba, Safaricom is a let down! My bill comes to about 8000k each month yet its my ADSL back up!

    I would say give me Celtel anytime!

  13. Bilongo

    The first impresssion in every market is always very important. When Kencell came into the Kenyan market the company had the RIP OFF mentality by charging highly besides the per minute billing.
    To them it was time to make huge profits not knowing that the common mwananchi who had limited options registered this in mind. I still elieve that they are now harvesting what they sow not soo long ago! My prediction is that even if they allowed people to make free calls for 24hrs very few people will be persuaded to move.
    Now their only option will be to give free phone that are sim locked and free calls for 6 months.
    This will give them the much needed customer base.

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