I was talking to a marketing manager from SCOM and he pointed out an interesting view on the ongoing price wars triggered by Airtel.

At one bob per minute, subscribers are buying very few scratch cards; therefore, retailers are selling very few cards as well [obviously!]

Consequently, many retailers are finding the business of stocking Airtel cards unsustainable and are slowly but surely opting out in favour of SCOM.

According to this manager [and I appreciate his bias], it is only a matter of time before Airtel can't find anyone willing to distribute their cheap airtime. Apparently, one of their biggest agents in Nairobi is planning to ditch the business!

Now that is probably an eventuality the Airtel people never thought about...

That may be true, but SAFCOM will also face the same challenge because it has reduced its calling rates.

However the sale of scratch cards is not something your typical retailer or kiosk owner undertakes as THE bread and butter of his/her business, it’s just one of the many, and more so a convenient product to have.

Also worthy of note, is that the retailer margins are unaffected and that the cards are moving faster now than they were before.

It will definitely affect the volume of repeat sales throughout the distribution channels of all the operators, but I do not think any retailer is about to remove the product from their shelves.

The situation is just unfolding as it should.

I think their Airtel's biggest danger and someone wise should be ringing the warning bells there is they are losing Brand Equity. As we say, a brand is a promise, Airtel assumed brand promise has become cheap rates or let's say 1bob. I can't imagine what will happen when they increase their calling rates by a cent.

I dont think airtime sales is the problem.Actually many agents make money through simcard sales and money transfer services,safaricom agents must also be feeling the heat from loss of Airtime sales.

Most airtel agents are feeling the heat becoz ZAP is not competitive as it should..I hav seen most zap agents who dont hav the float.

@Mukiha, the story might have some truth in it. I have been in the business for sometime and truly speaking the rate at which cards are going has gone down and in turn brought the matter of opportunity cost to the fore. Most guys who normaly took lots of airtel stock when the price war began have actually reduced their uptake and their main reason is normally the slow movement of the Airtel stock coz they say most of their customers buy 'safaricom.' Though safaricom's uptake has also gone down but not comparable to Airtel's.