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Wednesday, May 25, 2011

This “Bamba” Monster Called Safaricom

If you will read this post in the morning (Kenyan time) you will be taking it in even as a meeting will be going on between CCK Director General Charles Njoroge and chief executives of all the mobile phone operators in the country. The main item on the agenda is the thorny mobile number portability (MNP) service.

There is nothing new under the sun and to really understand the issues at hand it is important to understand the monster called Safaricom created by you and me and millions of other Kenyans.
Those Kenyans who know who this man is will better understand what is going on in the Safaricon versus Airtel wars.

What would you feel if you single-handedly created the cell phone industry in Kenya? Actually that is exactly what Michael Joseph’s Safaricom did. When he took over the reigns at Safaricom the mobile phone operator had one base station and one would-be competitor (Kencell, today’s Airtel) run by a sleepy CEO who did not believe that there was any serious market for cell phones outside Muthaiga and its’ environs. In those days it cost about Kshs 250,000 to own a cell phone and subscribers were also charged for calls received. This was happening when vegetable sellers in neighbouring Tanzania were already using cell phones.

Mr Joseph with very little knowledge on Kenya and Kenyans headed straight for the Kibera slums where he started his talks to the curious poverty stricken Kiberians with phrases like “This is a cell phone.” To date Joseph has not told Kenyans the fact that his advertising agencies and so called “marketing experts on Kenya” laughed at him in his face and told him he was crazy and what he was trying to do would never work. Anyway at about the same time the Kencell MD (who was making much more sense to local marketing experts) was addressing Kenyans through press conferences on the then debate about per second versus per minute billing for calls with phrases like: “It is much cheaper to buy a bottle of wine at a restaurant rather than a glass at a time.” Most of his audience had never been to a smart restaurant in their entire lives and would never EVER hope to come anywhere near one unless they were doing the cooking or guarding the cars outside. So they would never understand what the hell he was saying in a hundred years. The ones who understood did not care less about what they were being charged for their calls. Indeed some of them were pretty upset that the price for a mobile phone was rapidly dropping from the status symbol pricing of Kshs 250,000. Did you hear the story about the man in Karen who when driving past one day angrily threw his cell phone in the bush on seeing a night watchman using one as he walked to work?

Anyway you all know how that business fairy tale ended. Today Safaricom is a multi-billion shilling company, by far the most profitable enterprise in history in East and Central Africa and well beyond. Kencell has basically been struggling and has changed hands several times.

With this kind of historical background, if you were Safaricom wouldn’t you quite rightly feel that you owned the mobile phone industry in Kenya? And that anybody else trying to take away the customers you literally created has no right to do so? Those who will appreciate what I am saying here are entrepreneurs who know how hard it is to make one single sale let alone create and grab millions of faithful customers.

And with this kind of knowledge you will appreciate where the problem is. Fellow Kenyans we have created a monster called Safaricom and now that we have discovered the joys of cheaper calls we can’t just wish them away. In fact we cannot simply shout “I divorce you” three times and expect her to go away. Or at the very least behave themselves as we welcome our new younger and more desirable wife called Airtel.

The truth is that Safaricom’s super profits have come from our blood and sweat money. The company is still making profits even as they charge much lower tariffs. That is the truth.

To understand how companies that dominate rapidly growing markets can be uncontrollable monsters later when other players want a level playing field read the story of the richest man in history. One John D. Rockefeller. Interestingly Kenyans have in recent days seen for themselves the power of oil companies against EVEN legislation and the laws of a country. Indeed oil companies have organized regime changes in very many countries and it all started with Rockefeller’s monopolistic business tactics. But that is a story for another day.

In short I do not envy Bwana Njoroge and his CCK and my bet is that the meeting this morning will resolve nothing. The truth for ordinary Kenyans is that it is very difficult to move from Safaricom while retaining your cell phone number. Read this article. That is the truth!!

Other recent posts by Chris:
Ikolomani: Why the man with two wives won

Why the next president of Kenya will be the "wrong kind of president for Kenya."


Hot tip from Kumekucha: Did you know that even as you read this there are some Kenyans based in Nairobi quietly making money from all over the world (to the tune of $5000 and more every month without fail). This is their secret. Do your own research if you don't believe me

24 comments:

Anonymous said...

Good one Chris.
I think Airtel can only beat safaricom if the start dishing out free handsets to customers willing to zero graze for 2 years. Kenyans and our love for free things would jump to such a business plan. They can get cheap phones form China to make this deal work and in a year I believe they will have turned the tide the other way round.

Thats my free advice. For more, people usually pay me for thinking and saying these things!!

Anonymous said...

Apart from his love for exergeration-the guy has too much of it sometimes, Chris is the most entertaining and gifted Kenyan writer I know. I mean the guy manages to simplify such a complex topic as the monopolistic tendencies of market dominant enterprises into a very readable post like this one.

Mwarangethe should study Chris posts carefully and stop posting articles that are read by 3 people who are probably his students at the university, and commented on by 130 because they want to talk about something else and have not read a single word in his post.

Kudos Kumekucha Chris. Pure genius. Keep them coming please. I am the one who needs a daily dose of you. Remember the cocaine comment in your first come-back post?

Mwarang'ethe said...

Chris, if you want to cut a tree, do you cut the brances or uproot the roots?

The most logical way is to uproot the roots. However, for strange reasons, humanity prefers to cut the branches. Strangely, they spend all their lifes doing this and expect the tree to fall. Pure madness. They then pass over to next generations same shit job.

The problems presented by Safaricom, etc was mentioned jana in these words:

"... If you are AWAKE, you should have noticed something very strange has been happening since 1980’s. From this period, we have witnessed massive sale of basic industries, or NATURAL MONOPOLIES by states.

We are in the midst of the greatest enclosure of commons ever witnessed by mankind."

We then added that:

"... the global economy has been turned into a RENTIER ECONOMY to yield interest and rents (MONOPOLY PROFIT) to the few who now control the gold, land, and other BASIC UTILITIES which you will not do without.

Having put TOLL BOOTHS on the ESSENTIALS, they will RAISE PRICES to maintain their MONOPOLY PROFITS. This will take care of your income surplus leaving thee with BARE SUBSISTENCE income just to survive like a horse to work next day, as Karl Marx would say."

Source: http://is.gd/lty5V9

xxx

"Kencell has basically been struggling and has changed hands several times."

Oh, Lord of Heavens!

Chris like the rest of the Kenyans/Africans YOU DO NOT GET IT, and YOU DO NOT WANT TO GET IT.

Sample this:

"Critics of the capital gain tax suspension point to the change of ownership at the country’s second largest mobile phone service provider from KenCell to Celtel, Zain and ultimately Bharti Airtel as an example of deals that had the potential of earning the exchequer billions of shillings in revenue but from which the government got nothing."

and,

"Celtel International, the Europe based phone firm owned by Sudan-born billionaire Mo Ibrahim, paid $250 million to acquire Vivendi’s stake in the firm in 2005.

Tax experts say that deal alone was worth $75 million had it been subjected to a capital gain tax of 30 per cent."

$ 1m is equal to KES 85, 805, 001. 83, today.

So, KES 85 m by 75 is what brother?

So, who made real KILLING??????

And, who paid the tax to fix the common stuff? Wanjiru as usual who will be given stipend by Raila.

Is something wrong with African's heads or what Lord?

Source: http://is.gd/hmdsxF

xxxx

Anyway, let us continue enjoying Cold Blood:

Every time I see Babylon my blood runs cold,

Every time I see the wicked men my belly moves

When I see the condition
I said it's a CURSE

For the past 400 years ago
Things get from bad to worse

http://is.gd/ireBGC

Anonymous said...

Mwarang'ethe said
....Chris like the rest of the Kenyans/Africans YOU DO NOT GET IT, and YOU DO NOT WANT TO GET IT......

and you are the exception because you get it?

Anonymous said...

We would all like to experience more health, prosperity and success in our lives. God, being God, has all of these things, won't you agree? So to be full of God is to be full of health, prosperity and success. But how does one become full of God?

When God made you, He designed you to run at optimal level when you are filled with His love, like a car that runs at its best when it is filled with the right kind of petrol or gasoline. When you realize how much God loves you and you feed on His love for you, you will be supernaturally filled with the fullness of God.

And to be full of God is to be full of everything God is to you and has for you. To be full of God is to come to a place of life, health, peace, prosperity — total wellness.

Also, when you are conscious of how much God loves you and you become filled with the fullness of God, what follows is the next verse — God doing exceedingly abundantly above all that you can ask or think, according to the power that works in you. (Ephesians 3:20) You will experience the tremendous blessings of God exploding in your life! You will become a blessing magnet!

So as God's beloved, continue to be nourished by His love for you, and experience more health, prosperity and success in your life!

Anonymous said...

By the way Chris,

What happens to Sigalagala-Butere-Sirindi Road that Raila and other ODMorons commissioned while luring the Ikolomani voters to vote for their candidate?

Who else notices how Raila is behaving like Moi the more he continues to be the PM?
Thank God in under an year, we will do away with the PM position and those that try to get power through the back door.

The Oracle is Back and has Spoken

Mwarang'ethe said...

Mwarang'ethe said
....Chris like the rest of the Kenyans/Africans YOU DO NOT GET IT, and YOU DO NOT WANT TO GET IT......

and you are the exception because you get it?

5/26/11 1:37 AM

xxx

YES, we do, and, you better listen very carefully.

Sample this posted here jana:

"Dear reader, unnoticed by the majority of hard working and suffering working men and women, the global economy is now increasingly a two tier economy. The first tier/class shall consist of controllers of HARD money."

Today, we hear from the high priests of death, that:

"... yesterday, there was an unanimous agreement by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept GOLD as COLLATERAL, under the European Market Infrastructure Regulation (EMIR)."

And, as Socrates would say:

O men of Athens, ... But many as their falsehoods ... there was one of them which quite amazed me; I mean when they told you to be upon your guard, and not to let yourselves be deceived by the force of my eloquence.

They ought to have been ashamed of saying this, because they were sure to be detected as soon as I opened my lips and displayed my deficiency; they certainly did appear to be most shameless in saying this, unless by the force of eloquence they mean the FORCE of TRUTH; for then I do indeed admit that I am eloquent."

Anyway, http://is.gd/ld9o58

Philip said...

Chris says

"Anyway you all know how that business fairy tale ended. Today Safaricom is a multi-billion shilling company, by far the most profitable enterprise in history in East and Central Africa and well beyond. Kencell has basically been struggling and has changed hands several times."

My response:

I wish you had focused on what we gain from Safaricom making that huge profit. The huge profit does not come like manna but it comes from our expenses. I don't think this is something to glorify. If you were told Barclays or EABL or Coca cola or Bamburi makes huge profit will you celebrate?


Chris continues:

"With this kind of historical background, if you were Safaricom wouldn’t you quite rightly feel that you owned the mobile phone industry in Kenya? And that anybody else trying to take away the customers you literally created has no right to do so?"

My response:

You sound as if you want Safaricom to continue being a private monopoly. I totally disagree with you. Infact entrance of YU and Airtel was better than Safaricom continuing being a private monopoly. I wish I had time to prove this with figures. Drop in call charges has made Kenyans to spend 3 times less for the same services. Don't mention that even with the high charges the money goes back to Kenyans, you'll be wrong.

Chris continues:

"Fellow Kenyans we have created a monster called Safaricom and now that we have discovered the joys of cheaper calls we can’t just wish them away."

My comments:

Kenyans never and will never create Safaricom. You need to find out who owns Safaricom. You also need to know that Corporate entities have continuosly been pushing off individual in the shareholding of not only Safaricom, but also Kengen and soon KPLC. Just know that Safaricom isn't owned by Kenyans.

I don't understand the aim of this post. Just know that what majority of individual shareholders get is so little compared to what they spend on the same company to the extend that it doesn't make any economic sense.

I have a feeling this post is all about marketing Safaricom, unless you prove me wrong.

Please read the link below to know what is happening:

http://www.businessdailyafrica.com/Company%20Industry/-/539550/848582/-/t4jercz/-/index.html

The same started happening to Kengen, it will happen to KPLC, it nearly happened to RVR unless I don't have latest report. Soon Kenya will be owned by foreign companies.

I have to be honest with you Chris that when I read this post my conclusion was that unless you are directly gaining from Safaricom, then this is the worst post I have read from you coz it's grossly misleading and not constructive at all.

Philip said...

Chris says:

"....and now that we have discovered the joys of cheaper calls we can’t just wish them away."

Please note that it's the entrance of Airtel that made Safaricom to lower their charges, and not that Safaricom lowered so that Kenyans can gain, what I mean is that they were forced to do so because of competition.

If it were not for entrance of Airtel and YU maybe you could have heard Bobby Collimore saying something like this, "Because of increase in fuel cost and other energy cost, because of inflation, because of need to expand our network and improve our services, we will increase our charges to Kshs 10/minute".

Anonymous said...

@Mwara,
Please learn to listen and appreciate other people's take. Your attitude is so toxic so much so that all others are foolish but you.

Keep your EVANGELICAL economics to yourself and stop preaching to the converted. And while at it stop self-advertisement, will you?

Philip said...

Chris says

"Anyway you all know how that business fairy tale ended. Today Safaricom is a multi-billion shilling company, by far the most profitable enterprise in history in East and Central Africa and well beyond. Kencell has basically been struggling and has changed hands several times."

My response:

I wish you had focused on what we gain from Safaricom making that huge profit. The huge profit does not come like manna but it comes from our expenses. I don't think this is something to glorify. If you were told Barclays or EABL or Coca cola or Bamburi makes huge profit will you celebrate?


Chris continues:

"With this kind of historical background, if you were Safaricom wouldn’t you quite rightly feel that you owned the mobile phone industry in Kenya? And that anybody else trying to take away the customers you literally created has no right to do so?"

My response:

You sound as if you want Safaricom to continue being a private monopoly. I totally disagree with you. Infact entrance of YU and Airtel was better than Safaricom continuing being a private monopoly. I wish I had time to prove this with figures. Drop in call charges has made Kenyans to spend 3 times less for the same services. Don't mention that even with the high charges the money goes back to Kenyans, you'll be wrong.

Chris continues:

"Fellow Kenyans we have created a monster called Safaricom and now that we have discovered the joys of cheaper calls we can’t just wish them away."

My comments:

Kenyans never and will never create Safaricom. You need to find out who owns Safaricom. You also need to know that Corporate entities have continuosly been pushing off individual in the shareholding of not only Safaricom, but also Kengen and soon KPLC. Just know that Safaricom isn't owned by Kenyans.

I don't understand the aim of this post. Just know that what majority of individual shareholders get is so little compared to what they spend on the same company to the extend that it doesn't make any economic sense.

I have a feeling this post is all about marketing Safaricom, unless you prove me wrong.

Please read the link below to know what is happening:

http://www.businessdailyafrica.com/Company%20Industry/-/539550/848582/-/t4jercz/-/index.html

The same started happening to Kengen, it will happen to KPLC, it nearly happened to RVR unless I don't have latest report. Soon Kenya will be owned by foreign companies.

I have to be honest with you Chris that when I read this post my conclusion was that unless you are directly gaining from Safaricom, then this is the worst post I have read from you coz it's grossly misleading and not constructive at all.

Philip said...

... and I hope my comment will not be deleted again.

Philip said...

Why is my comment being deleted.

I sent it twice and and on both cases they were deleted.

If its offensive then tell me.

Anonymous said...

The worst is yet to come for Safaricom and Airtel users, and consumers will have to experience a lot of growing pains with the cell phone industry.

So far, Safaricom is the dominant monster, however if Airtel and other innovative providers manage to get a good chunk of the market share, then consumers should not be surprised if they end up at the mercy of a four or six headed monster, an oligopolistic creature that will be more greedy, blatant, and deadly than the current one eyed monster known as Safaricom.

When push come to shove, Michael Joseph may end up reverting to the same old game that still continues to play itself out within the communication industry in the western hemisphere, with regard to striking deals and closing in ranks with major rivals (Airtel and others) in the name of self-preservation.

How so? Through price fixing, bid rigging and collusion that is all done for the express purpose of increasing profits, bottom line.

Consumers may end up leaving the frying pan only to drop into the fire, when the current monopoly by Safaricom mutates into a duopoly with Airtel and then into an oligopoly as the market share mushrooms.

There may be some relief for consumers but the cartel will always win big time as they do in the oil industry.

I hate the analogy, but the cell phone is like crack cocaine or chang'aa, consumers will always crave for it and need it to feed their addictions at whatever cost as dictated by immediate market.

Bamba Ubambwe au Bamba Ubambike for the time being.

Anonymous said...

Chris,
Despite the increase in the number of mobile phone service providers it seems there has been no increase in the quality of calls both local and international

If you are phoning someone living in the US or UK or other western nations abroad the quality of the calls is hit or miss-sometimes good but most times bad. Therefore Safaricom and Airtel and the rest should not celebrate just yet there is need for them to improve alot on the quality of phone calls they offer their subscribers otherwise all they are celebrating is making money at the expense of their customers

Anonymous said...

... $5,000 and more a month without fail.

Kumekucha, looking at Africa as a whole, what countries would you say have a soft power? What can they provide? Is there an African dream? A Kenyan dream?

Anonymous said...

Kenyan consumers should borrow a leaf from the Malaysian experience and seek better services for their money.

Anonymous said...

Now the likes of Safaricom and Orange have appealed to the government to step in with the warning that the price drops will result in job losses as companies struggle to remain profitable.

While Airtel Kenya CEO Rene Meza and others may be starting to smell blood as they position themselves to take more bites at the mobile telephony.

'Ours will be a world class 3G network. We are going to offer extremely affordable data services to our consumers, even better than the affordable rates we are offering currently. We don't want Internet costs to be prohibitive. We want them to be affordable, especially to students. This is part of our investment plan'. - Rene Meza.

Should the government step in or not given its modus operandi Kenyan style?

Lest we forget the fact that 'state intervention has been at the core of the wealth creation and economic success stories, starting with Britain and Europe in the late 15th century, carrying through to the USA in the 19th century and Japan, Taiwan and South in the 20th century, and China and India in the 21st century'.

Anonymous said...

Following the suspicious untimely death of the late olympic champion Samuel Wanjiru the usual public family brawls that occur when a true African polygamist dies has begun to take place

Remember that there is no such thing as a third world country or developing nation or poverty stricken people there is only 3rd world thinking

One would expect African men who are alive and married to more than one wife to learn a lesson from Wanjiru's death and the most famous public family brawls of all time i.e. the family of the late Girshon Kirima. If you insist on marrying more than one wife you must also prepare your affairs in order so that you don't subject your loved ones to the drama of infighting over your meager(in most cases) earthly possessions.

Remember there is no such thing as 3rd world country, only 3rd world thinking.refusing to learn lessons is part of 3rd world thinking

Anonymous said...

Anon 3:08 PM
Your people and neighbours can't wait to see what will happen after your expiry date. Pilipili usioila yakuwshia nini? Why paint all men with one stroke of your shallow and myopic brocken brush? Build your fortune but let Wanjiru rest in peace.

Anonymous said...

I wonder where Cardinal John Njue is to give us another lecture on the morality of CJ nominee Mutunga in the light of Fr. Kizito's arrest for sexual molestation.mmmmmmh! how the wheels change

Anonymous said...

Anon 12:12 AM
Sexual predators come in all shapes and sizes and from all segments of society, both christian and none christian.

Sadly, there are some of clergy, not of all them, who are now part of the not so holy equation.

Back to the CJ nomination process, it's unfortunate to find that some of these so called "religious leaders" are somehow ignorant of the fact that they were selected (nominated) by their fellow men to lead, guide and 'guard' their fellow men and women at one point or another.

Most of the older church leaders like John Njue and the rest of them have grown up through the seminary system since their early teens and they don't know of any other better way of addressing issues or even dealing with people who are not codependent on them or happen not to be their employees, seminary students, priests and followers who are at their mercy.

Unfortunately for religion as it were, some of these religious leaders have audaciously developed a huge superiority complex, a sense of entitlement, and are so drunk with power to the point where they have come to really believe that they directly speak on behalf of God, their way is the only way, everything they say or decide is final and the rest of the world should not only obey them without question but pay homage to them.

They have always forgotten the obvious, which is that they don't represent nor speak for those who don't belong to their congregations or denomination, and Kenyans live in a democracy and not under a monarchy or a religious empire.

All things considered, some men of the cloth will continue to make a spectacle of themselves as was the case during the referendum, while they alienate so many people, including their own in the process.

Anonymous said...

Chris, I couldn't help but digress for a moment away from "Bamba Mbao!".

Anonymous said...

WTF! is there only one dictionary, authority and visionary on Kumekucha, who will quickly trash! and shred any statement of fact or fiction!

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