India’s Bharti Airtel has taken the axe to its tariffs in Nigeria, repeating a recent similar move in Kenya, slashing call rates in the West African nation by half, to just 12 naira (R0,55) a minute.

The move could spell trouble for bigger rivals MTN and Glo Mobile. But analysts have played down the financial effects on MTN.

Bharti acquired Zain — the pan-African assets of Kuwait’s Mobile Telecommunications Co — in a deal worth US$9bn, making it the second-largest mobile operator in Africa after MTN.

The company, which is known for offering dirt-cheap calls in India, is now rebranded the Zain operations as Airtel.

Not long after buying Zain, Airtel slashed retail rates in Kenya, sparking a price war. The Kenyan market is dominated by Safaricom, which has greater than 80% market share.

MTN investors have expressed concern that similar price cuts in Nigeria could spell trouble for the JSE-listed mobile group. Nigeria is MTN’s biggest and most profitable market. It has 51% market share in the populous nation.

Analysts say MTN will either have to match or come close to matching Bharti’s prices.

“A price cut will not be good news for MTN. It will have to drop its own prices to within range of Bharti’s new rate,” says Avior Research telecoms analyst David Lerche.

However, he says the Nigerian market is “very elastic” and lower rates should result in an increase in subscriber numbers.

BMI-TechKnowledge MD Denis Smit says a rate cut shouldn’t affect MTN too seriously. He says the company has almost certainly prepared itself for a tougher competitive environment.

“Telecoms is competitive all over the world now. The days of easy competition are long gone. Volumes should pick up as the rate gets cut,” Smit says. — Candice Jones, TechCentral