@Stocksmaster i belief the price wars/massacres began in the second half thus we will have to wait for full year results to know the full extent.

How to cut costs:

1. Put a hold on their 4G plans and extend the reach of the cheaper 2G and 3G (Reduce CAPEX to save on cashflows)

2. Cut on their advertising and promotions spend

3. Payroll has to be trimmed... sorry for employees

4. Not much can be done on their financing and network maintenance costs.

The assumptions are a bit farcical.
Are we assuming that the Ksh3 will hold for a year?

My fear is that Zain is not through with the price wars. It has nothing to loose and all to gain by a further price reduction to below Ksh 3 per minute.

The acquisition of 3G by Zain and Co. and extension of this price wars to internet services will leave the only significant growth area for Safcom as MPESA (which basically is a Vodafone product managed by Safaricom based on a five year agreement.Safaricom pays 32.5% of MPESA Revenue to Vodafone which may rise to 50% of revenue if MPESA grosses EUR 24M per year - Source: Page 132 of Safcom Prospectus.

A further Zain assault on Safcom may well push this share to the Ksh 3.5 range, a price that may well be supported by fundamentals.

The telecommunication companies need to borrow a leaf from the Kenyan banks...........despite the regulators low base interest rate, they work as a sector to ensure that the loan interest rates don't fall below a certain level ensuring a good profit margin.(Thats why i concentrate on bank stocks for investment in Kenya; their heart lies with the shareholder and maximising his/her return on investment)

At this rate, the telecom companies will surely haemorrhage financial by creating unsustainable business models all in the name of competition.

Happy hunting.

Bharti, being listed in India, how much loss can they absorb, say zainK dents the P/L line by 10B sh loss. Last time I heard, bharti was not such a collosal multinational in P/L, i think they made 150m USD. This kind of money has limit to what proportion can be haemorrhaged by a single(kenyan) operation.

its going to be interesting.

Its a full full conditioon!