Of Airtel, Safaricom dominance and Competition issues

In December last year, Airtel wrote to the Communications Authority of Kenya (CAK) seeking its intervention in repressing/curtailing/cutting the legs (insert your own interpretation) of Safaricom. I thought Airtel was arguing that the public needs more choices, that the public is robbed etc….. but its just business tactics.

I have been looking for details of that letter by Airtel to CAK but now it has been published and almost verbatim. Please read it with a business mind and get to understand what Airtel is asking for. There is no way to write this without looking like I am defending Safaricom, so, now you know.

The gist of it is that Airtel wants Safaricom to spin off its businesses like Mpesa and cede their competitive edge which is pricing, its marketing campaign to be scrutinised before it hits the market, Safaricom base stations to be sold out to a third party, Safaricom to pay its competition higher for call termination, and Safaricom to allow national roaming free.

For many of us who operate a side hassle or a corner shop, think of the many times you have wished there was an authority that could knock your biggest competition out of their perch and give you a chance to run away with their business? Unfortunately for many, you don’t have that chance that Airtel seems to have gotten.

First, let us get it out of our heads that Airtel is a broke company, it is the fourth largest mobile company globally, and it brags about it locally in this Standard article. Here is the quote from that story.

 “ Airtel is the fourth largest mobile operator in the world. Airtel is the second largest in Africa in terms of size and the largest in terms of 3G network in Africa,” he said adding that Airtel was one of the first to launch 4G network in Africa. “I launched it (4G network) in Rwanda, and in Seychelles,” 

You don’t get to be fourth largest by being broke, but I am sure Airtel will also say that the Kenyan unit is independent from the parent company.

Without favouring Safaricom or Airtel, let us take the business angle and evaluate what Airtel is asking the regulator, and say a prayer, hoping that we also get to demand of the same from our competition. I can do with a version of this regulator, to just ask/demand my competition, that is doing so well, to cede their ground to me. Forget whatever effort or time they took, I just need it.

I was a bit disappointed that Airtel was raising the issues, a company that has been operating in Kenya for the last 15 years. At some point in the early 2000s, the two companies were head to head, then per second billing came up and Airtel/Kencell was slow to react…

So, what are the salient issues in that letter?

1. Market dominance

I think its time that we got to know who has market dominance in what areas. There is a process set out in the new Act, that stipulates what a dominant player should or shouldn’t do. I don’t think that it will be a death sentence if Safaricom is declared a dominant player, they are, in GSM voice and SMS, that is from sector statistics in Q3 last year.

But to be declared a dominant player, the CAK must do a sector wide survey and identify the players that dominate areas like Internet provision, voice etc. That takes time and there is no regulator that would make a declaration of dominance without an attempt at a survey….That will take time.

While discussing the issue of dominance, we can also ask whether Airtel has done the same in a market like Zambia where they are dominant with 80 percent of the market share. Are they allowing the competition to use their national infrastructure free, coz in such cases, the competition would have no motivation to invest in network expansion- why when you can use free?

2. Innovation

From the story, it seems that Airtel has a problem with Safaricom’s innovation as demonstrated in products like Mpesa and marketing promos like Tetemesha, but the nerve to say that the public or the regulator to scrutinise the marketing or campaign budget is amusing.

This maybe construed to mean that Airtel is devoid of innovation, and that their teams tasked with market acquisition do not work. Airtel seems to think that Safaricom has reaped more advantages from its innovation department.

We can start by reading this piece on how Airtel was stealing Safaricom’s thunder with the mobile money platform.

Airtel has been very innovative and from the days of sharing infrastructure with KDN, they have taken the market with some unique products.

Let us re-read this story of Access Kenya and Airtel partnering to provide affordable E1 lines via fibre. Think of E1 lines as the digital equivalent of old Telkom lines. It provides affordable communication for small and big companies and its a real virgin market.

That story was in 2011, when Safaricom was struggling with JTL fibre and didn’t even have a chance to even think of providing voice via fibre. By 2012, Safaricom was dealing with problems of not investing in fibre when it had to discontinue its unlimited bundle, a service Airtel was still offering. You can read my take. Safaricom has since laid its own fibre and is busy offering E1 services for the corporate market.

I can go into the details of interrelation between fibre and GSM voice but the upshot of it is that the sales from AccessKenya and Airtel would amount to Airtel lines and companies will spend on the network if you show value.

So, if by 2011, Airtel had a chance to beat Safaricom in one area it was still limping, why hasn’t it? Why hasn’t its partnership translated to more business?

Mpesa is also a big talking point, I think Airtel had lowered its mobile money transfer rates earlier than Safaricom, so what happened?

 

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3. Infrastructure sharing

Airtel is suggesting that Safaricom spin off its base stations like it sold to Helios last year. Usually, mobile operators spin off or sell their towers if they are unable to make a business case out of it, or feel they can make more money. If a company feels that they are able to make money even with the passive infrastructure, it is in their place to do so; they must be assured that the company taking them over will make better use and more money that the company is doing.

Is it in Airtel’s place to direct the regulator to order/direct Safaricom to sell of its towers?

 

4. Marketing budget

Airtel has an issue with Safaricom marketing budget like Tetemesha promo, saying that none of the competition is capable of competing….even the fourth largest mobile provider?

Try telling one of the Tetemesha winners that Safaricom is bad…..or should be stopped from marketing….

 

What is the problem with Airtel?

My main problem was that in the lengthy letter, Airtel didn’t ask for anything practical, like the revision of spectrum fees. That is something the CAK can do, without involving Safaricom or whacking their legs in any way. Even though Safaricom’s threat that they will reduce investment is also smelly.

The regulator gets a lot of money in spectrum fees annually, ask for help there. There is also the Universal Services Fund, ask for help in expanding your network. That is something the CAK can do without passing the buck.

Let us explore the problems…..

1. Lack of investment over the years

There was a time Safaricom struggled with congestion, and Airtel was as clear as can be, but at some point, that must have stopped. In marketing, Airtel was there with promos and marketing activations, that has dwindled over the years.

Why would the network that was struggling with congestion, with poor call completion and handover rates according to the regulator, be the one that is expected to bail out in terms of national roaming services? Roaming is an agreement between two companies, does Airtel need regulation in that bit too because if the regulator allows free use, no guarantee that Airtel will invest in network expansion.

2. Too many expatriates

Sometimes back I was involved in a conversation with a former or disgruntled employee, who claimed that since Airtel entered the market, Indian bosses streamed in, even if they didn’t have to. It is their investment yes, but you can imagine doing market activation in Abothuguchi or Kendu bay and the guy leading the team is from India, yes, India has had lots of success but this is a different market that may require locals.

There is no guarantee that the locals will turn over profits but if there were any lessons with the South African expats in KDN; expats don’t equally have the magic portion, no matter the success they had in their home markets.

Leadership has a direct consequence to performance and stability. Maybe Airtel needs to look in before looking out for answers.

3.  Group mentality

Yes, Airtel is a large group that has operations in several countries. But that is where it should stop. Marketing should be country specific. Some of those ads they run are Africa wide and may not resonate with users in some markets.

How about go back to the old ways of taking country specific approach?

4. Hopeless communication team

I don’t know what criteria Airtel uses to interview in their communication department but even village cattle dip operators have better response and communication from this department. These guys want to just bombard me with rubbish press releases but when I ask serious questions no response. You try to push, they send you an irrelevant speech that has nothing to do with what you were asking.

Yes, Airtel has a budget to entertain journalists and bloggers but how about they try answering questions and make sure there is another consistent telco voice in the media apart from Safaricom and at times Orange?

Airtel has made significant investment but they have also outsourced customer care and their bas stations, so technically, their risk is minimal in this country. Asking for regulatory capture/ curtailing of a publicly listed company is well within your rights.

Let us wait and hear what the regulator says…..

 

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Industry Consultations between the Communications Authority of Kenya and Mobile Network Operators

Mobile Network Operators (MNOs) met today with the Communications Authority of Kenya (CAK) to discuss the quality of service delivery to consumers. This is after a recent report by CAK  see here revealed the declining performance in service delivery to mobile users.

Today’s meeting was held under the auspice of the recently passed Kenya Information and Communication Amendment Act, 2013 and the need to review the performance of the sector.

The MNO’s agreed to discuss the methodology and parameters for measurement of the Quality of Service with the Authority to address the changing dynamics in the sector. “The current methodology is not inclusive of all key performance indicators for instance data protection. We need to see what is feasible and what’s not ” said Wangusi Francis the Director General CAK

The authority is in the process of outsourcing the quality of service measurement in order to infuse efficiency. The consultant will help with segmentation of the country to realize the eight key performance indicators.

The authority has also noted the rampant vandalism of the infrastructure and its effect on the development of networks. “I commit myself to working in close consultation with the Ministry of Transport and Infrastructure as well as county governments in order to ensure proper planning that makes provision for way leaves and infrastructure corridors during constructions” said Fred Matiang’i cabinet Secretary, Ministry of Information, Communications and Technology.

The telecoms industry has consistently demonstrated its potential through an increased growth rate over the years. The National ICT Master plan targets a contribution of 25% to the GDP by 2017. In 2013, the government revenue from the sector was $480 million an approximate of 5.8% of the overall tax revenue and over 23 million mobile money transfers and over 200,000 jobs!

Some of the setbacks experienced so far include: cyber security, ICT services, sim card registration, registration of minors, confidentiality, whether proxies are required or not and the  high roaming charges within the East Africa Community.

On what should be a happy note for the consumer, the authority and the ministry together with other sector players are working on a framework that will help reduce the roaming charges within the region so that mobile users in Kenya and the East African community can communicate at affordable costs.

Operators expressed optimism of the Kenya Information and Communications Act, (Amendment) of 2013 gazetted on 10th January 2014. They equally endorsed the Kenya Information and Communications (Registration of Subscribers of telecommunications Services) Regulations, 2014 which will soon be promulgated by the Communications Authority.

When asked about Safaricom’s license renewal given that today’s meeting was to encourage stakeholders to enhance good will, Wangusi said that they are going to see if Safaricom operations are in line with the law and if they are in order there is no problem with their license renewal CAK is going to be firm but fair.

Now, there is another committee that has been put in place and I have come to accept that perhaps committees are the only way to solve issues in Kenya maybe they are not bad after all, but that name is a trademark. Anyhow there is a technical committee in place on matters of movement to LTE (4G) network to see how spectrum is going to be released after digital migration. Then we are going to patiently wait to be informed on the approach  used.

And as I pen down be reminded that penalities for all defaulters are still in place!

Digital Migration: How Far are We?

The long awaited digital migration deadline is drawing nearer and attracting varying offers from different manufacturers. However, the migration may remain a dream for longer than we anticipate following three mainstream media houses Royal Media Services, Nation Media Group and Standard Group move to court over licenses whereas the digital migration may be moved to June 2014!

To explore further on the subject we spoke to Meredith Beal Business Development Manager, Africa Media Initiative, Kenya who also works with the African Media Mission Earth and Medina in the USA.

What is your experience working in the digital migration in the USA?

During the transition in the US from 2008 to 2009 I was involved in the TV side in terms of engineering and public awareness campaigns. I was also a member of the Texas association broadcaster working with the Federal communication commission which is equivalent to the CCK here helping them with worldwide issues.  Each household was entitled to a voucher and subsidized purchase of the boxes but we had some problem with that because when they first released the boxes the expiring date was 90 days after the vouchers were mailed sometimes people would receive their voucher go to the retailer and the boxes were not yet there and by the time the boxes reach the retailer their vouchers have already expired.

READ MORE

Kenya tea industry transforms to paperless transactions with the launch of online portal

Key sectors in the country are going digital in the delivery of their services. The most recent one is the tea industry under the agriculture sector. Tea Board of Kenya (TBK) and Trade Mark East Africa (TMEA) have launched an online portal that will enable tea industry stakeholders interact with their regulator TBK online. 

The online portal has automated TBK’s processes, making them available electronically. This new development is expected to reduce transaction time, increase efficiency in service delivery and reduce the overall cost of doing business.READ MORE

Kenya Red Cross | Safaricom response to the Westgate Crisis

Saturday 21st, September 2013 is a day that brought pain and grief in our Kenyan history.  Shortly before 1300hrs an armed group of people gained forceful entry into the Westgate Shopping Mall and attacked members of the public with hand grenades and gun shots, leaving scores of people injured and others dead.

According to the Government of Kenya, the number of deaths stood at 69 with over 200 casualties. After this massacre the Kenyan people came together to help the survivors; through the planning of organisations such as Red Cross and Safaricom.

The Kenya Red Cross Society (KRCS) a leading player in alleviating human suffering sought interventions such as: country- wide blood donation drive, psychosocial support services, tracing and restoration of family links and a 24-hour command centre at the Visa Oshwal Centre located in the vicinity of the Westgate Mall.

RED

On the other hand, Safaricom launched a nationwide mobile money transfer through M-PESA line 848484 that enabled the public to raise funds that are so far an estimated over 100 million.

READ MORE

Gina Din Exits Safaricom- Why I admire her business style

Last week, Gina Din Corporate Communications (GDCC) announced that it will not be pitching for Safaricom Public Relations (PR) tender. On twitter, there was so much talk of whether she was kicked out or decided not to renew, for me, all that doesn’t matter, what matters is that for 10 years, Gina Din held the Safaricom PR account, you can imagine the money that comes with with it.

I don’t know Gina and have never met her, only heard of stories of how the account rose from a retainer of shs 1 m a month to 7 or 8m, depending on who you believe. There is so much said about Gina Din CC but I will dwell on the few business lessons I have learnt.

1. The power of networks

Many people in journalism and PR circles know that Gina was a good friend to Michael Joseph, former Safaricom CEO and without watering down her PR prowess, Michael supported her in ensuring survival after five years. I am sure when Safaricom started paying her shs 3m a month, other international or more recognizable firms started angling for business but she managed to hold on to it.

Whether Gina knew Michael, was introduced to him or just pitched, got it right the first time and Safaricom liked her work from the word go, I am sure she is happy to have had such a network.

You see, in business, I have learnt that you may be great at what you do but people will choose who they do business with because they know their work, somebody else has spoken highly of them or in some cases, you are just lucky and in your pitch you impress and nail it. Either way, if you have the right people supporting you, the sky is not even the limit.

Of course there is no comparison between my networks and Gina’s while she will hang out in the high joints, where she is likely to mingle with the CEOs while the joints south of Tom Mboya street cannot do me any favors. You can imagine joints with names like “Reke Marie”, “Njugima”, “mboco-ini”, Mutigwo iganjo” etc…

Michael is also said to have helped and inspired many journalists, opening their eyes to opportunities, putting in a word where possible, some were able to take advantage while others could not be helped, opted just to pursue hand outs.

So, taking que from Gina, I am optimistic that soon I will get one influential person who believes in my abilities and it may be the end of my association with poverty 🙂

2. Knowing when to call it time

For those who come from coffee growing areas, you know that by 3pm, the coffee must be on the way to the factory. So, in my family, we used to tell each other, “umira na karia ugethete” loosely translated to mean that when time comes, you get of the farm with the coffee you had picked. In most cases, whether commercial or family, we would be paid for what we pick, young and old.

For me, I think Gina decided to get off with what she had. The money she had made after 10 years seemed enough and hey, she bagged a contract from Orange, how cool is that?

We have seen cases of people trying to hang on to something that is past its time and in the process, make enemies and say things that could have been avoided. I wish many people, especially politicians can learn how to call it time.

I am sure when that tender was sent out, GDCC must have know their time was up and as you can see, they jumped ship.

3. Hiring former journalists

There are many companies that would like to have the level of media presence that Safaricom has. I was speaking to a PR rep the other day who was laughing at how they went for a pitch and a client was complaining that they have not been getting coverage like Safaricom and that is why they moved from the previous agency. That is great for GDCC.

For journalists, I think its easier to pitch a story to another and in some cases they will tell you that you need to write because the client needs to see something, and given the history, you have to. Which reminds me of sometime last year when a former colleague, now in PR had Nokia Siemens top global guys in town and he needed tech journos to ask questions, and he sort of insisted that I must be there. Well, the traffic situation meant that I had to get off a mat in Ngara and by the time I got to KICC, I was late and you can imagine the sweat, all because a former colleague had insisted it was important. Well, of course there are others who you cannot go to such lengths.

So, hiring journos has worked well for GDCC and media coverage, even though some will argue that there is nothing in media coverage and that corporate communications entails more.

Then there is the thorny issue of salaries. There are also other people who will tell you that GDCC doesnt pay well and that is why they hire journalists from certain media houses and not others.

Well, if a journalist is not well paid and GDCC pays them a bit higher, then they can use it as the audition to get to the well paying PR company that will only poach them after proving themselves at GDCC. By the way, some of the so called PR gurus have passed through GDCC and I must say I have never heard any of them talking badly of the pay at GDCC. Maybe its because in our earlier years we worked as correspondents, the pay was poor and delayed, but don’t ask how we survived 🙂

If you look at it, much of the success at GDCC has been acheived by journalists who do not boast of masters degree, MBA and other papers, that shows the level of quality in the newsrooms.

I digressed so much, now I am not even sure of the point- I guess, its make as much money and use readily available cheap labor :).

Conclusion

We can say all we want but for a local company, GDCC has made a very good showing; help on the way but a very good showing nonetheless.

There are companies that are not focussed on delivery, they want pitches that show how the office is well equipped with employees with masters and ability to spin theories but not delivering. I am told pitches nowadays are about photocopiers that also make tea, air conditioned offices, nice locations etc.. so, if your office is in one of those based at Mageso chambers, mugoiri house etc… you may not go far.

So, the pitch is up, GDCC snapped Orange from Ogilvy, lets see if Safaricom goes to Ogilvy, or Hill & Knowlton, also part of Ogilvy East Africa. On another note, Safaricom may just decide to promote another up and coming local agency.

Ten years ago, Gina Din may have been small but today, its big. Can you imagine going for a pitch with 10 years at Safaricom under your belt?

Well, enough with all the PR talk.

 

Site seeing in New York…..

A few weeks ago I travelled to New York and had a chance to play tourist. Because I couldn’t go see caged animals and I am not a fan of museums and that kind of stuff, I decided to do what I don’t get to do in Nairobi.

Staten Island ferry station

When in the ferry I was wondering how to prove that I was in NY and could not get lady liberty very well…so I have to tell people..thats is it on the background, with some arguing that thats Mombasa ferry 🙂

Then, Javie, Sue and I got to pose as true tourists with NY on the background 🙂

Javie, Sue and Becks

After all that…. how can you leave NY without a drink? Well, I got mine 🙂

What can I say?

More photos coming….

Bungee jumping on Vic falls….

For many people, when I said I bungee jumped or wanted to, they thought, how crazy can you be? Others thought I had lost it. To some extent yes, coz I remember lacking the words when I called my mum to say I arrived safely. I could not call her before going to the Victoria Falls coz I wasnt sure I would come back safe, its always a gamble.

Can imagine me explaining to my mum “nyuma kuruga ndaraca-ini handu maikagia mundu ta kigutha” loosely translated to mean I was at the bridge where they catapult you below. Sounds absurd considering that most of our lives are interesting enough and may not need some of the risks.

However, I had made up my mind, if I was in Livingstone, I wanted to do the bungee and no amount of pressure would make me bark off, thats why I could not tell my mum before hand, am sure she would have talked me out of it or called me every five minutes to know if I was ok.

Victoria Falls has 100% records, there has been no accidents but there’s always a first. I must say that the guys are very good, professional and funny. You start on the slide, which is just the wire from one end to the other….its gives you a taste of what to expect.

I was determined and there was no turning back; but the free fall feeling is something… by the time I was 110 meters below, I remember thinking, I must be crazy. By the time they throw you up and down…. you feel the stretch on the ankles.

The funny thing was, I never asked the guys how I was supposed to come up, but I knew I had to….and I finally did…. It was all worth it!

Was it crazy? Maybe….

Upward swing

There is this part when they pull you up then throw you down again…. I was thinking the rope will come off… but what could I do? Just enjoy..
Upward swing