East Africa’s most profitable corporate has gone back to the drawing board after earlier announcing its termination of its highly popular post pay “Karibu Tariff”. The Bob Collymore led firm instead is considering adjusting the charges to increase profitability from the service.
The telecoms firm had stopped taking applications from new subscribers last year and announced that the loss-making tariff would be shelved in May this year.
Safaricom currently offers three personal post-pay plans — Advantage Postpay, and the two Karibu tariff plans: PostPay 1000 and Postpay 2500.
Customers on the tariff currently pay either Sh1,000 or Sh2,500 per month for a mix of talk time and text messages (for use within and outside Safaricom’s network) as well as data bundles.
Rather than cancel the tariff, Safaricom says it will either increase the cost of each bundle or decrease its size at the current rates to maintain its customers while ensuring profitability. This will allow them to retain those on the tariff and begin taking on new subscribers.
“Termination of the product is not an option; customers will have to be offered the tariff under new terms, which are still being finalized,” said a company official familiar with the matter.
“The new tariff will be made public in April and will take effect the following month. Those who chose to continue will be migrated.”
The Karibu post-paid tariff currently has two price plans.
For Sh1,000 per month, a subscriber gets 900 minutes talk time for on-net calls (within the Safaricom network), 100 minutes for off-net calls as well as 100 megabytes of data and 100 on-net SMSes. For Sh2,500 a month, subscribers get 2,200 minutes for Safaricom to Safaricom calls, 300 minutes to rival networks, 250 megabytes of data and 250 on-net text messages.
The plan, therefore, means that customers pay less than Sh1 per minute to make calls.
Safaricom, the country’s leading operator, says these rates have been financially unsustainable since 2011 when the tariff was introduced in the midst of a price war in the industry.
“People on post-paid are essentially making calls at less than one shilling per minute,” Bob Collymore, Safaricom’s CEO, said in May 2014 when announcing the termination.
“This rate is not only lower than the post-paid tariff we give to corporates but also to prepaid consumers.”
The telco has other post-paid tariffs, including one where customers pay for units they actually spend every month but the Karibu tariff — which is considered most affordable — has been leading the growth charge.
In the three months to June last year, Safaricom’s post-paid clients grew by 10. 5 per cent to 522,783 customers, according to the Communications Authority of Kenya (CA).