Zain bets on ringing at more rural homes

By Macharia Kamau

Mobile operator Zain Kenya will make a strategic shift in its communication programmes to target rural communities.

The strategy is aimed at increasing coverage in rural areas, where mobile telephony penetration is still low compared to urban areas.

Only 20 per cent of people in rural Kenya have cell phones, compared to 60 per cent in urban areas, making the regions a ripe market for growth.

To get the message across to this market, the company intends to spend less in advertising on newspapers and television and more on radio and below the line media.

Rene Meza, Zain Managing Director: "Re-branding was successful because our market share has increased from 13 to 20 per cent."

The shift to Swahili and vernacular radio stations might see the company’s advertising spend stagnate or increase marginally.

Last year, the company spent Sh1.1 billion in advertising due to a re-branding programme that saw it transform its corporate identity from Celtel to Zain.

The expenditure was, however, low compared to that of its main rival, Safaricom, which spent Sh1.8 billion. "Our advertising spend was high in the second half of last year due to re-branding activities. It is now complete and we will now put emphasis on expanding our voice services to the rural areas, which are yet to be covered adequately," said Mr Rene Meza, the company’s managing director..

He said re-branding was successful because the company’s market share has increased from 13 per cent to 20 per cent.

Preference for radio advertising is informed by low penetration of television and newspapers in rural areas.

"In rural areas most of people don’t read newspapers, so if we intend to capture this market, we have to use the media that they are conversant with," said Meza.

Voice services

He added that while voice services had potential for growth in the rural areas, the company would still market data services in the urban market, which is the primary target.

This year’s outlook for the company might be bleak given the challenges both in Kenya and the world. Due to the current global financial crisis, Zain might suffer from reduced marketing support from its parent company.

"We face the challenge with the global financial crisis affecting companies operating in Kenya," he said adding that growth might be marginal as people have more immediate needs than getting cell phone connectivity.

He added that in spite of the problems that the country faces, the company sees great potential in Kenya and intends to make long-term investments this year.

"This year, we will investing over $100 million (Sh7.9 billion) in network expansion, increasing its capacity, introduction of new technology and broadband services," he said.

Zain has more than Sh40 billion in Kenya since the re-branding in August last year. The company is, however, banking on its recently launched m-commerce facility Zap to stir competition in the rural market.

Safaricom’s money transfer service, M-Pesa, might have an upper hand having hit the market first.

But Meza is optimistic that due to the broad array of services offered on the Zap platform, it would rival M-pesa in rural and urban markets.