23 September, 2008

Safaricom Slumber -Sirens Blazing !

After the April 2008 IPO... nothing much in terms of competitiveness, new products ,services or image branding seems to be coming out of Safaricom whilst the competition is getting stiff! I bet i am not the only subscriber who is getting worried about this most profitable mobile telephone services company in Sub Saharan company and we have good reason to be worried.Consider the following :-
  • November 2007 -France Telkom buys 51% percent Telkom Kenya Shares from the Government
  • September 2008 Telkom South Africa and Telkom Kenya set up Orange Mobile Services(website link) and Orange Broadband .The new service targets to reach at least 50% of the population.The initial roll out intends to add 1 million subscribers per year calls between Orange mobile, Orange fixed wireless and Telkom Fixed will cost KES 7 per minute, while calls to the other mobile service providers will cost KES 14 per minute – significantly less than both the other mobile operators. SMS from Orange mobiles will cost KES 3.5 to any mobile phone service.Safaricom currently boasts over 8 Million subscribers but this is bound to change as it looses more subscribers to the new players in the industry mostly due to their high call cost charges!
  • June 2008 Celtel changes to Zain and introduces tariff plans that see all prepaid subscribers paying KES 3 per minute on off peak hours(6 p.m to 6 a.m and on weekends) and the Marketing buzz around classic 105 Zain Man who dishes out money to members of the public should definately send the marketing and advertising department at Safricom bck to its drawing board.
  • Zain and Telkom's Orange have undertaken massive bill board advertisements ,wall branding,road shows etc their presence is definately being felt in the market....Safaricom still slumbers...there's nothing new from them!
  • September 2008 Econet wireless Kenya Limited begins its roll out program as the Third Licensed cellular phone services provider.Econet Wireless Kenya holds 70 per cent of the company, Starnet Limited owns 26 per cent, Corporate Africa two per cent and Crosslink two per cent.Earlier on in the year Econet Kenya Wireless Ltd, sold 49 per cent of its share to an India telecommunication company Essar.Econet Wireless boasts of following notable milestones :
  • Has More than 11 million subscribers in five networks
  • Group employs staff from over 20 nationalities
  • Recorded Africa’s rollout of a network by launching a mobile network in Botswana in March 1998 six weeks from awarding of a GMS mobile license
  • Entered Zimbabwean market two years after two incumbent competitors, assuming market leadership within three months and listing the company in the same period
  • Achieved market leadership of 57% in Nigeria during first year of operation after launching Econet Wireless Nigeria in August 2001
  • Econet was the first mobile cellular company in the world to introduce a mobile news service of the BBC World News and South African Broadcasting Corporation news
  • First mobile operator in Africa to introduce CNN news on cellular phone handsets
  • First operator to introduce a duo-numbered SIM card which was launched in Zimbabwe in 1998
  • First operator from an emerging market to own a 3-G licence in an OECD country in New Zealand
  • First African telecoms company to build an international satellite hub in the UK
Most of Safaricom subscribers then need to critically look at the future of the company ...worse is the fact that last week Safaricom shares traded at less than 5 Kenyan shillings (KES 4.60-4.90)far much less than their retailing price during the IPO.The share price for Safricom have been less than static in the trading floor of Nairobi Stock Exchange.One tends to think that the IPO was meant to offload shares(wink! wink-Mobitelea) and leave the network to die its natural death .If i was Michael Joseph i wouldn't renew my contract only to suffer shame in the event the Company collapses.The new companies are rapidly edging out Safaricom while there is no sign of hard fight by the network to retain or get new subscribers !Safaricom wake up from your slumber lest your massive network and infrastructure goes down to the dogs!


  1. I was so surprised to read about the violence in Kenya after the recent elections. I am glad that things have come back to normal. I have visited Kenya twice and people are so hospitable and nice.

    it is a must see country for nature loving people.


  2. Safaricom (of which i'm a patient shareholder) has to engage in the rope-a-dope marketign strategy. all the new companies, Zain, Orange and Econet are arriving within the same span of time, with big marketing pushes and budgets. consumers are waiting to see which is best and Safaricom would also be wise to see how they play out before responding. I'd wager that many people thinking about going Orange last week, may now be thinking that Vuka is a much better package

  3. Thanks Bankelele for your insightful perspective! i really hope that,that is their intelligent strategy! indeed patience is a virtue but their subscribers may become jittery and the damage may be irredeemable!

  4. Quite an Interesting perspective there from Bankelele.

    Hmm... Zain has very deep pockets. therefore waiting might not be in Safaricom's best interests!

    I think Safaricom, Econet and Telkom should join forces (i.e. collaborate as Industry players to counter Zain's move).

    1. Take Zain to court for unfair competitive practices

    2. Get public support by telling kenyans about the potentially damaging effects of Zains activities to the economy. Remember - Zain repatriates revenues while the other companies reinvest locally! All Kenyans will Suffer if Telkom and Econet go down unfairly...

    3. Level the playing field: Push for anti-subsidization laws and fair competition laws for foreign companies! Am sure the GOK wil not want to be seen as having swindled its citizens by offloading shares - then allowing unfair, economically damaging practices to flourish!

    Fair competition is good; unfair competition is very bad. That should be the message to CCK and GoK!

    I think other "oil victims" (e.g. KQ) would be quite interested in such developments.



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