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Al-Ahram Weekly 6 - 12 July 2000 Issue No. 489 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 July 2000 Issue No. 489
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| Published in Cairo by AL-AHRAM established in 1875 |
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By Niveen WahishIt's summertime and GSM operators have hot deals. Competition within the mobile phone market began to heat up a couple of weeks ago. Two years ago, mobile phone lines carried a prohibitive activation fee of LE1,500. Today, they are handing them out for free.
The spark that ignited the wildfire market battle was a new promotion strategy adopted by both of Egypt's only two GSM operators, MobiNil and Click. The mobile services began to offer their post-paid subscribers the option of obtaining two additional lines at no extra cost. Initially, the concept was to allow the recipient the opportunity to give lines to family members. The transfer of phone lines took a couple of months to complete, and in the interim, the original holder of the line was responsible for it.
However, Click decided to take the concept a step further. Instead of merely offering its own clients free lines, it began offering MobiNil subscribers free lines. Click's Public Relations Manager Bahaa El-Koussi explained that the aggressive campaign is designed to broaden its subscriber base. When contacted by Al-Ahram Weekly MobiNil's CEO Osman Sultan was not available for comment.
Although MobiNil has yet to respond to Click's predatory market strategy, both firms seem to be benefiting from the market frenzy stirred up by the free line promotions. Customers are grabbing up lines as quickly as they can and service centres have waiting lines that extend out the door.
El-Koussi says the Click network can easily accommodate the influx of new customers. According to El-Koussi, Click's network can absorb 400,000 users over and above its current half million. "So far, we have given out thousands of free lines -- to the extent that the SIM cards ran out and we supplied new ones."
While some clients are taking advantage of the market war to gain an extra line, or to give one to a relative, others are looking to turn a profit. Private lines are selling for anywhere between LE300 and LE400. The current official market price for a post-paid line is around LE500. Considering that the activation fee last year was LE1,200, it is obvious that the stiff competition has had a profound impact on the market.
According to El-Koussi, the dramatic developments in the GSM sector is the result of natural market maturation. When mobile operators enter a new environment, the activation fee needs to be set high in order to recover the startup costs. "Once these investments are recovered, tariffs automatically drop," El-Koussi said.
Consequently, although the rapid drop in activation fees were due to heightened competition, the lower fees should prove permanent. According to El-Koussi the low fees will not affect over-all market revenue. He cited the European and US mobile markets where no activation fees are charged at all. El-Koussi explained that mobile companies in these markets generate revenue on the basis of call charges and a diversity of services.
Cartoon by Fathi
