Category Archives: kenya communications

From Huawei to Makmende

Last Tuesday was a roundabout day that began with the Equity Bank half year results announcement at and ended with Safaricom launch of a U8220 Android phone made by Huawei.

In between I shook hands with James Mwangi, Churchill dodged my paparazzi snap attempt, a friend of mine missed out on a free giveaway of the Huawei phone, and I missed out on buying some shares in Equity Bank as my stockbroker (temporarily) misplaced my funds.

At the Huawei launch, I had interesting chats with one pal on Kenol and another who found out an interesting tale about mobile spectrums – basically Kenyans should ignore mobile phone company promises and forget about 4G as it is reserved for the Kenya military until further notice.

Huawei and Safaricom were jointly launching an android phone to the Kenyan market and since the Safaricom COO was late in traffic as per his boss, Michael Joseph the CEO stepped up and launched the phone on his behalf. The CEO seemed underwhelmed by the occasion, maybe because his retirement was about to be officially announced or maybe because it was because the Smartphone being unveiled would cost about Kshs 30,000 and was nowhere near the $100 (~Kshs 8,000) price for a smartphone which he has commented as being a key target for future data growth.

This ambivalence perhaps cascaded down because when Safaricom ran adverts for the new phone in the next day’s paper, they were advertising a VF845 costing Kshs 16,500 ($206) and not the U8220, which had just been launched. The ‘correct’ ad for the U8220 then ran the following day pricing the phone at 27,200 (~$340)

Two days later, Bank of Africa formally opened their Ngong Road branch at Bishop Magua Center. This is their second branch opening this month after Nakuru and they have set out to go after the not for profit customers. They have launched a Goodwill Current Account with goodies for NGO’s including waiver of monthly ledger fees, cheque book costs, (Kshs) withdrawal/deposits, internal transfers, incoming wires, banker’s cheques, interim statements and a minimum operating balance.

And finally on Friday, in the same building, the iHUb hosted a launch by Kuweni Serious (Get Serious) of a series of clips aimed at getting young Kenyans to participate in the constitutional referendum and in public life and starred Makmende.

Here’s one clip

New Media Companies Redux

It’s been two years since this blog post comparing Access Kenya and Scangroup which debuted at the Nairobi Stock Exchange (NSE) at about the same time. They are both back in the news this week for diverse reasons along with a third ‘new media’ company Safaricom, which debuted later in 2008 on the NSE.

Scangroup: has just announced plans to buy stakes of 51% in Ogilvy & Mather Africa and 50% of Ogilvy East Africa. (statement here) – two companies are both subsidiaries of UK’s WPP Group who own 27% of Scangroup.

The investor at the Scangroup notes that group has recorded growing ads in TV and radio but declining in print media. In 2009, the communications sector was their largest customers with 29% followed by finance at 15%. Scangroup has 61% of the advertising market in Kenya followed by Access Leo Burnett with 13% and then Ogilvy & Mather with 10% – while their plans going forward are to do more online adverting and take the Ogilvy as their main brand across Africa

a version of this Safaricom by Squad digital, a Scangroup venture appears in the NY Times pages

Access Kenya: are in the news (details here) following their postponed by another three months of the annual general meeting that was to have taken place yesterday May 4 and payment of their divided. The company has not commented beyond a press statement.

From the blogs: On AK – a year ago, they were very very liquid while as recently as two months ago, they were hailed as a must buy stock.
from Twitter @bankelele not a shareholder, but as a concerned proxy lack of info is bad. AK should issue a profit warning or cautionary statement on restructuring
@mainaT I figure if AccessK is struggling now when internet is a growth sector, its got issues & a cash flow problem that won’t go a way 4 a while…but, Centum did the same in late 08 early 09 when it was having Cflow issues that meant it couldn’t pay a dividend
@roomthinker: Access Kenya customers, used to their speeds were not surprised to learn their AGM would be late
@coldtusker Y announce a dividend if u have CF shyte? For AK to say, ‘no div coz expanding’ is easy & plausible. Or pay only 5 cents like safcom…I think this is a bigger issue… Sold off at 22 so dont really care but I think they are in play. AK cud always delay div after AGM…I think less of cashflow issue. More of a acquisition/takeover/sale matter http://bit.ly/aJVCMm [#nairumours]

Finally we have Safaricom who initiated a spat with the government [statement here] after the Minister for Information (gazetted new rules for the sector including a fair competition one (draft here) and accusing the government regulator, Communications Commission of Kenya (CCK) of seeking to curtail Safaricom’s growth through price controls and to allow competitors to increase their market share.

The next day the three other mobile companies, Yu, Orange, and Zain replied in a joint statement applauding the new rules and saying they were not targeted at anyone (read Safaricom) but anyone who abuses of a dominant position in the market CCK had adopted international practices to bring real competition to the mobile sector.

This is new ground for Safaricom – when Orange raised a fuss about the uncompetitive Kenyan market, it looked like GoK would side with large taxpaying Safaricom, but now that all the small (unprofitable, they admit) new mobile entrants have teamed up, some token measures are likely to be brought to rein in Safaricom which is estimated to control at least 80% of the mobile sector by most measures. How do you bring down Safaricom from 80% to 60%?

Orange Kenya Outlook

Ever since the East African broke the story about France Telecom asking the Kenya Government (GoK) to reimburse it for more than the amount it paid to invest in the privatization of Telkom Kenya in 2008, its been an interesting tale – (summarized well here at Ratio Magazine) – and also confusing that a company invested in the mobile business – a component of one of Kenya’s fastest-growing sectors (communications) until recently, could be struggling. Orange is also the exclusive partner apple for the i-phone in Kenya which is the world’s leading smartphone.

Market leader Safaricom is part of the problem as Orange, Zain and Yu have been unable to shake its dominance of the market whether voice, data, dealerships, money transfer.

That Orange expects more support from GoK as a shareholder is evident since they still own a majority (51%) of Telkom Kenya, compared to the 35% GoK owns in Safaricom. E.g. Orange, Zain and Yu have been lobbying hard for the lowering of the cost of a 3G license from the current $25 million which only Safaricom has paid (Kahenya wants proof that 3G was paid).

But lobbying to GoK against Safaricom is not always as easy since they are one of the country’s largest taxpayers and a vital cash cow that is a consistent source of revenue for GoK increasing expenditure. e.g In the two years prior to Orange arrival, Safaricom paid GoK direct and indirect taxes of 24.1 billion shillings ($320 million) and 18.4bn ($245 million) which is almost as much as the 25 billion that Orange paid for their investment.

Outlook: Looking at the Orange parent accounts (France Telecom) for year 2009, it appears that Orange Kenya has no value (invested EUR 244m in 2007, wrote it all off in 2008) and is now also listed as an asset available for sale.

But Orange could look on the bright side and see that the market is changing while the “rags to riches” tale of safaricom success, as told by CEO Michael Joseph may never be replicated, the market potential is there; whatever mistakes they have made in technology selection, product rollout, and marketing can be fixed. Joseph is himself expected to retire by the end of the year taking away an intangible brand impact from the company, and a compromise is likely to be reached with 3G license cost, EASSY fibre, inter-connection rates and number portability which will ease the environment for new investors Essar (Yu), Bharti Airtel (who are buying Zain Africa assets) and Orange.

Mostly Mobile

The mobile phone story is everywhere now, and it seems it has taken on a life of its own, bringing real life transformations as more applications and uses develop around it.

What’s happening in mobile now here?

Conferences: Conferences have always been there, but tech conferences, especially mobile related ones, are really sexy these days thanks to Ushahidi – (currently working at Haiti earthquake emergency operations and M-Pesa from Vodafone/Safaricom.

February will see Mobile Web East Africa which will have a round-table format and will feature, among others @whiteafrican (Ushaidi), @ VincentMaher (Vodacom) @MosesKemibaro, and @kahenya.

Later in the month will be another Mobile Banking Conference (AITEC’s COMESA Banking & Mobile Money Conference)

Mobile Wallet: With over 8 million users signed up in two years, M-Pesa is all the rage in the media owing to the staggering M-pesa growth rate that continues. @whiteafrican in a recent post showed that mobile transfer volume numbers are actually quite low compared to formal banking systems; however the increasing number of subscribers and organizational partners that M-pesa is drawing indicates a growing disenchantment with traditional banking/payment channels. Partners now include airlines, schools, insurers, media houses (KBC, Nation media group), micro-financiers, banks (CFCStanbic, Family) as well as others such as Chloride Exide (solar equipment), Davis & Shirtlift (water pumps) , spare parts (Ecta-Subaru), Oriflame (beauty products), Gor Mahia etc.

Mobile Investment: Over at the Nairobi Stock Exchange, M-Pesa is represented in the form of Safaricom whose share price has been leading a resurgence of NSE shares by re-attracting foreign and institutional investors

chart from rich.co.ke

Faux Mobile However as simple mobile banking strikes a connection with consumers tired of hidden bank charges, banks are rolling out their own mobile platforms. Kenyans largest bank Barclays has embarked mobile banking and recently announces that mobile banking is free – except at Barclays ‘free’ costs 100 shillings, as this was the tariff increment passed on to its customers at the same time

Know Your Mobile Users: There is a mandatory registration of mobile subscribers is ongoing, a mild shock to the laizze faire pre-paid when anyone with less than $1 could acquire a new phone line . However the exercise in not unique, and SIM registration is also ongoing in Tanzania, Nigeria and other countries. In Kenya the exercise will help reduced instances of crimes related to mobile phones such as extortion.

Mobile Domains: In March, there will another conference in Nairobi – ICANN which concerned with domain names – and in Kenya, embattled domain registrar Kenic has just announced raft of new low priced domains including mobile domains – .mobi.ke for mobile sites, and .me.ke for personal sites.

Mobile Data Costs: Why the high costs of mobile communications? Some argue that Kenya has a skewed regulatory environment that that favours Safaricom and protects it as a government revenue generating machine (Safaricom is Kenya’s largest corporate taxpayer) but hurts the consumer through high communications costs.

Zuku Slashes Kenya Internet Prices

Thanks K for the Breakfast invite

It’s been a big year for Zuku of the Wananchi Group; they got new funding and the fibre cable reached in Kenya – they are a shareholder in TEAMS which is operational (but not yet launched) and have also bought capacity on Seacom. Their CEO said the 50 gigabytes they have on TEAMS will serve the anticipated needs of their Kenyan customers for the next decade and they have the option to increase capacity on either cable.

Reduced internet prices: This morning (2/12/09), Zuku announced reduced internet prices of ~50% as follows for the wimax package:

• Prosurf (256Kbps) 3,000 Kshs 1,500 (~$20)
• Supersurf (512 Kbps) 6,000 Kshs 2,500 (~$33)
• Megasurf (1 Mbps) 10,000 Kshs 4,500 (~$60)

The one-time installation cost has also gone down from 5,800 to Kshs 3,000, lowering the entry barrier for homes.

For small corporates and SME’s they have new Zuku Biz which is an unlimited corporate broadband packages priced as follows:

• 10Mbps will cost Kshs 10,000 per month (~$133)
• 15 Mbps will cost Kshs 15,000 per month (~$200)
• 20 Mbps will cost Kshs 20,000 per month (~$266)

For these, installation costs are Kshs 3,000, and equipment and VAT are included in the pricing, with security services offered at an additional cost (firewall, e-mail security, spam management).

Reaching out to property developers Zuku is currently available in Nairobi, Nakuru, Mombasa and Nyeri, and in Nairobi 40 buildings are fully wired with another 100+ having cabling up to their doorstep. By reaching out to developers and property owners, Zuku hopes to convert planned, new, and existing buildings to be internet-ready properties that meet the modern demands of some of their prospective tenants for high-quality affordable internet. Zuku have a dedicated team to liaise with property owners on right-of-way, and installation, issues for buildings. (Here’s a list of Nairobi fibre-ready buildings)

New Nairobi Hotel: The Zuku breakfast took place at the new Ole Sereni Hotel on the edge of the Nairobi National Park, off Mombasa Road. The building previously housed the old US Embassy in Nairobi before its conversion to a 134-bed, 5-star hotel. Like the adjacent Panari, Ole Sereni also lies close to Nairobi’s Jomo Kenyatta Airport, shielding their guests, and transiting airline passengers, from some of Nairobi’s (now) notorious traffic jams. Though not yet officially open, and with some facilities yet to be completed, management says the hotel rooms are already fully occupied. Wildlife in the park can sometimes be observed in the early morning and should become a regular occurrence once a waterhole is completed (inside the park fence) to be observed from the hotel’s dining room and bars which have a (relatively) pocket-friendly Tusker price of 195 ($2.6).