Somalia’s telecommunications price war
By Harar24 Editorial’s Team
The average Somali usually carries more than one phone or a phone with dual SIM capability or maybe even Tri-SIM capability. If Hormuud has the better deal he’ll use Hormuud, when Nationlink offers discounts he’ll switch to it and when Telcom offers cheaper international calls he’ll switch to the latter. Even in the most remote areas, bedouins, shepherds and nomads will be seen using mobile phones.
This is the typical scenario in Somalia, the telecommunications businesses are booming and heavy competition is causing them to be at each other’s necks.
The rise of private telecommunications companies in Somalia came as a result of the nonexistence of any government regulated telecommunication since the fall of Siad Bare in 1991. After the beginning of the civil war many companies appeared in the country to fill the void and to provide Somalis with services to call in and out of the country. One of the first companies, if not the first, was Telcom, launched in 1994. It’s now one of the main telecommunication companies in Somalia. However it has many competitors, one if it’s main competitors being Hormuud, launched in 2002 it excels amongst other companies, yet it’s always in a constant price war with competitors.
The telecommunications companies in Somalia don’t stop at just providing phone services, many also provide Internet services. Hormuud in early 2011 launched GPRS internet service for its customers. Similarly Telesom, based in Somaliland, provides GPRS connectivity and also high speed broadband connection. Telecommunications business further provide banking services that are used on the phone, such as EVCPlus offered by Hormuud, or ZAAD service and eMaal. The offers made by these companies in order to win more customers and gain their loyalty are endless and so is their competition.
In 2005 the tree abovementioned companies (Hormuud, Nationlink & Telcom) signed a deal to keep their competition in check, but how much of this agreement remains? The competition between the three has always been a bit of a rowdy one until now, leading Hormuud to not allowing its customers to make calls to Nationlink customers at times and vice versa or charging the subscriber more when calling somebody subscribed to a rival company.
As of now competition has only increased and become fiercer in the telecommunications market. With the recent takeover of Telcom by Somtel (even though Somtel hasn’t publicly announced this, it’s a well known fact amongst the Somali people), rivalry between them and Hormuud has only increased. Now customers from Telcom can’t call Hormuud and vice versa. This comes after Telcom declared that their customers are able to speak to each for 50 minutes per $1, on top of that they announced that their customers will only have pay $5 for unlimited GPRS internet usage. Hormuud responded by offering its customers the opportunity to speak for 50 minutes after 10pm for only $1 and by offering 20mb for $1 for its GPRS internet users. A nice offer, but we don’t see it living up to Telcom’s offer. However the advantage these two companies have over others are their internet services. Their internet services is one of their biggest door to their revenues since the availability of internet connection is really scarce, and where available is really expensive, thus people turn to the readily available internet connection on their phones.
The end of this price war is no where in sight, however residents of Mogadishu who spoke to Harar24 seem to be rather enjoying the competition between these companies and wish for it to continue. A resident told us: “It’s all in our benefit and our pockets don’t suffer, we’ll just buy multiple SIM cards and take advantage of all the offers.”
“The people are really enjoying the plus sides of the competition between these companies. I personally have been able to make local and international calls for cheap rates thanks to this” another resident told us.