Safaricom Fibre Price Wars With Both Local and International Competitors Like Starlink and Airtel and Its Effects on Telecommunication Industry in Kenya

Abstract

The telecommunications industry in Kenya has witnessed intensified competition, particularly in the fibre-to-home broadband segment, driven by Safaricom’s rivalry with both local players like Airtel and international entrants such as Starlink. This study examines the dynamics of the Safaricom Fibre price wars and their implications for the industry, focusing on consumer satisfaction, service quality, and market sustainability. The research identifies key factors influencing this competition, including Safaricom's position as a market leader, Airtel's costcompetitive fibre offerings, and Starlink's satellite-based internet, which uniquely targets underserved rural areas. Utilizing theoretical frameworks such as Porter’s Five Forces, Game Theory, Diffusion of Innovation Theory, and Price Leadership Theory, the study contextualizes the strategic responses of these players within a rapidly evolving market. Empirical evidence highlights a shift in consumer behavior, with affordability surpassing service reliability as a priority for many users. This is reflected in Safaricom’s 15% increase in customer churn in 2023, driven by the appeal of competitors’ pricing and service options. The findings reveal that Safaricom has adapted through aggressive pricing strategies, enhanced service quality, and value-added bundles, yet it faces challenges in maintaining profitability and sustaining service quality amidst reduced pricing. Starlink has introduced a disruptive innovation with its satellitebased technology, appealing to rural demographics previously excluded from fibre connectivity, while Airtel continues to erode Safaricom's market share in urban areas with lower-cost packages.

Primary data collection from broadband users and stakeholders, combined with secondary data analysis, underscores the dual impact of the price wars: improved accessibility for consumers but potential declines in network quality and profitability for providers. Quantitative analysis links pricing strategies to market share fluctuations, while thematic insights emphasize strategic differentiation through service bundling and loyalty programs. This study concludes that while Safaricom retains a dominant position due to its superior network and established brand, it must address threats from Starlink and Airtel by balancing competitive pricing with long-term sustainability. Recommendations include expanding rural coverage, investing in technological advancements, offering tailored service bundles, and enhancing customer retention through loyalty initiatives. These strategies could not only preserve Safaricom’s market position but also stabilize Kenya’s telecommunications sector amid ongoing competitive pressures. The research contributes to understanding the interplay of pricing strategies, consumer behavior, and technological innovation in a developing market context, providing actionable insights for stakeholders within Kenya's telecommunications industry.