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Future of Safaricom - break up due to dominance!
Gathige
#31 Posted : Sunday, October 18, 2015 4:27:54 PM
Rank: Elder

Joined: 3/29/2011
Posts: 2,242
Gordon Gekko wrote:
@iris, I have no grudge against success. I have a major problem with monopolistic control over critical sectors, worse, control over several critical sectors. If safcom, which today can shut down Kenya's financial sector takes control of the security sector (which it will at the conclusion of the cops project), we will have sold ourselves to vodacom.
There's a reason why we have a competition authority in Kenya, there's a reason why Bell Telephones in the US was broken up, there's a reason why there are active plans to breakup Google. There's also a reason why any political leader ensures that he fully controls the financial, information and security arms of government.


Nowadays Governments rarely control anything but have regulatory institutions to monitor. From private prisons to private security agencies Governments now use commercial entities as a front for under cover espionage missions.. Think Huawei and its ban from participating in Government contracts abroad for fear of being used a a front by Beijing.

Safcom is tooo small to be considered a monopoly. Breaking it will only hurt the consumer as the over players are merely jokers. Airtel has been around for just too long without nothing to show for it. Orange sufers from inheriting a company witha bad name and it seem not likely turn around soon.

"Things that matter most must never be at the mercy of things that matter least." Goethe
iris
#32 Posted : Sunday, October 18, 2015 8:36:41 PM
Rank: Member

Joined: 9/11/2014
Posts: 228
Location: Nairobi
Gathige wrote:
Gordon Gekko wrote:
@iris, I have no grudge against success. I have a major problem with monopolistic control over critical sectors, worse, control over several critical sectors. If safcom, which today can shut down Kenya's financial sector takes control of the security sector (which it will at the conclusion of the cops project), we will have sold ourselves to vodacom.
There's a reason why we have a competition authority in Kenya, there's a reason why Bell Telephones in the US was broken up, there's a reason why there are active plans to breakup Google. There's also a reason why any political leader ensures that he fully controls the financial, information and security arms of government.


Nowadays Governments rarely control anything but have regulatory institutions to monitor. From private prisons to private security agencies Governments now use commercial entities as a front for under cover espionage missions.. Think Huawei and its ban from participating in Government contracts abroad for fear of being used a a front by Beijing.

Safcom is tooo small to be considered a monopoly. Breaking it will only hurt the consumer as the over players are merely jokers. Airtel has been around for just too long without nothing to show for it. Orange sufers from inheriting a company witha bad name and it seem not likely turn around soon.



A lot of those saying Safaricom is abusing its dominance are hard-pressed to quote specifics (just like Airtel), most likely because it is not as obvious as they would have us believe. @vvs mentions supernormal profits, Thin SIMs and increase in bank charges. Now when did being really profitable become an abuse? As someone said earlier, Equity was growing over 100% for several years. High bank charges can be fought by innovation -- no doubt equity played a part in the demise of Barclays as a superbrand in Kenya by doing things differently. Companies always try to earn more money and should only be stopped by competition, not legislation unless of course they "abuse" their dominance, which in the case of Safaricom is proving a little too pesky to define. The Thin SIM business is a little bit reminiscent of what is happening with 4G -- instead of the gava building the infrastructure like Rwanda did, they have left it to Safaricom to do the building, and when Safaricom starts charging for use of its infrastructure, there will be all sorts of noises.
Check this from Airtel boss:
“It is common sense that Safaricom needs to be split,” Airtel’s chief executive Adil El Youssefi told a Senate committee in July. “Let M-Pesa be a national platform that is independent, for the mobile user to freely choose their mobile network.” Link
My old prof used to call this waffling.
VituVingiSana
#33 Posted : Sunday, October 18, 2015 10:13:30 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,346
Location: Nairobi
@iris - Safaricom benefited immensely from restrictions in allowing other players into the market. Safaricom's license was given to them courtesy of Telkom Kenya. Not many know this but there were only 2 mobile GSM licenses to start with.

Vivendi/Merali (KenCell) got one. Why do you think that happened?
Telkom got the other but when Safaricom was spun off an entity called Mobitelea became a 20% shareholder.
A 3rd licensee (Strive Masiyiwa) Econet was frustrated during the initial formative years until after Safaricom was already entrenched in the market.
The 4th license was given to Telkom but it was a convoluted process. An entity called Alcatraz had their fingers in this pie too.

Therefore, Safaricom had a chance to make super-normal profits since there were only 2 licensees. This does NOT mean KenCell/CelTel/Zain/Airtel did not screw up.

3-4 players from the beginning would have been better but the powers-that-be had their fingers in both KenCell & Safaricom hence the delays in licensing another entrant.

ThinSIM [Just a dual SIM but much thinner] - Safaricom did everything they could to stop/delay the process. It took Equity one year to get it into Kenyans' hands. Only Safaricom (not Airtel or Orange) really opposed this. The investment was all by Equity so what parallels are you drawing with Safaricom & 4G? [It doesn't use Safaricom's network for data or voice].

The increase by 300% in charges for bank to/from M-Pesa just after Equity launched Equitel seems suspicious. What's your take?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
watesh
#34 Posted : Monday, October 19, 2015 8:10:13 AM
Rank: Veteran

Joined: 8/10/2014
Posts: 992
Location: Kenya
VituVingiSana wrote:
@iris - Safaricom benefited immensely from restrictions in allowing other players into the market. Safaricom's license was given to them courtesy of Telkom Kenya. Not many know this but there were only 2 mobile GSM licenses to start with.

Vivendi/Merali (KenCell) got one. Why do you think that happened?
Telkom got the other but when Safaricom was spun off an entity called Mobitelea became a 20% shareholder.
A 3rd licensee (Strive Masiyiwa) Econet was frustrated during the initial formative years until after Safaricom was already entrenched in the market.
The 4th license was given to Telkom but it was a convoluted process. An entity called Alcatraz had their fingers in this pie too.

Therefore, Safaricom had a chance to make super-normal profits since there were only 2 licensees. This does NOT mean KenCell/CelTel/Zain/Airtel did not screw up.

3-4 players from the beginning would have been better but the powers-that-be had their fingers in both KenCell & Safaricom hence the delays in licensing another entrant.

ThinSIM [Just a dual SIM but much thinner] - Safaricom did everything they could to stop/delay the process. It took Equity one year to get it into Kenyans' hands. Only Safaricom (not Airtel or Orange) really opposed this. The investment was all by Equity so what parallels are you drawing with Safaricom & 4G? [It doesn't use Safaricom's network for data or voice].

The increase by 300% in charges for bank to/from M-Pesa just after Equity launched Equitel seems suspicious. What's your take?

Its just business, every business person would do almost anything to protect their billions.
mazingira
#35 Posted : Monday, October 19, 2015 12:03:57 PM
Rank: Member

Joined: 10/26/2012
Posts: 136
Safcom is not in a monopolized industry but more an Olygopoly , a state where there are limited producers and sellers . The difference here is that Safcoms brand loyalty , innovation and dominance has become one that is so strong that it cash withstand the strongest of storms and wipe out competition by loosing on products just to wipe out the competition. Smart and fair in business its a dog eat dog world out their and only the fittest survive .
Mwalimu
#36 Posted : Monday, October 19, 2015 5:21:43 PM
Rank: Member

Joined: 6/12/2008
Posts: 11
Location: Home
Kencell messed us. It was the stronger company as compared to safcom but they were not innovative.
Boris Boyka
#37 Posted : Monday, October 19, 2015 7:41:38 PM
Rank: Veteran

Joined: 11/15/2013
Posts: 1,977
Location: Here
Mwalimu wrote:
Kencell messed us. It was the stronger company as compared to safcom but they were not innovative.

I have liked how Kencell/celtell/zain/Airtel are baby crying. This company was a favourite and became big headed just like Barclay's bank. It (zain) refused to lower calling rates, maintained high value scratch cards, delayed to have money transfer platform, stchupidly avoided rolling out competitive data services so as to remain "classy", classy my foot. Safaricom on the other hand juust like equity understood the game of numbers and sucked in wanjiku at their level of products. Safaricom has been so innovative and thinks of future while Airtel is a lazy hyena waiting safari com's arm to fall instead of hunting by itself.
Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
watesh
#38 Posted : Monday, October 19, 2015 9:25:39 PM
Rank: Veteran

Joined: 8/10/2014
Posts: 992
Location: Kenya
Boris Boyka wrote:
Mwalimu wrote:
Kencell messed us. It was the stronger company as compared to safcom but they were not innovative.

I have liked how Kencell/celtell/zain/Airtel are baby crying. This company was a favourite and became big headed just like Barclay's bank. It (zain) refused to lower calling rates, maintained high value scratch cards, delayed to have money transfer platform, stchupidly avoided rolling out competitive data services so as to remain "classy", classy my foot. Safaricom on the other hand juust like equity understood the game of numbers and sucked in wanjiku at their level of products. Safaricom has been so innovative and thinks of future while Airtel is a lazy hyena waiting safari com's arm to fall instead of hunting by itself.

Hahahaha pewa beer moja....
Boris Boyka
#39 Posted : Monday, October 19, 2015 9:50:07 PM
Rank: Veteran

Joined: 11/15/2013
Posts: 1,977
Location: Here
watesh wrote:
Boris Boyka wrote:
Mwalimu wrote:
Kencell messed us. It was the stronger company as compared to safcom but they were not innovative.

I have liked how Kencell/celtell/zain/Airtel are baby crying. This company was a favourite and became big headed just like Barclay's bank. It (zain) refused to lower calling rates, maintained high value scratch cards, delayed to have money transfer platform, stchupidly avoided rolling out competitive data services so as to remain "classy", classy my foot. Safaricom on the other hand juust like equity understood the game of numbers and sucked in wanjiku at their level of products. Safaricom has been so innovative and thinks of future while Airtel is a lazy hyena waiting safari com's arm to fall instead of hunting by itself.

Hahahaha pewa beer moja....

Going for Famous Groose now!Drool Drool
Cheers Bro.
Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
iris
#40 Posted : Tuesday, October 20, 2015 4:37:46 PM
Rank: Member

Joined: 9/11/2014
Posts: 228
Location: Nairobi
VituVingiSana wrote:
@iris - Safaricom benefited immensely from restrictions in allowing other players into the market. Safaricom's license was given to them courtesy of Telkom Kenya. Not many know this but there were only 2 mobile GSM licenses to start with.

Vivendi/Merali (KenCell) got one. Why do you think that happened?
Telkom got the other but when Safaricom was spun off an entity called Mobitelea became a 20% shareholder.
A 3rd licensee (Strive Masiyiwa) Econet was frustrated during the initial formative years until after Safaricom was already entrenched in the market.
The 4th license was given to Telkom but it was a convoluted process. An entity called Alcatraz had their fingers in this pie too.

Therefore, Safaricom had a chance to make super-normal profits since there were only 2 licensees. This does NOT mean KenCell/CelTel/Zain/Airtel did not screw up.

3-4 players from the beginning would have been better but the powers-that-be had their fingers in both KenCell & Safaricom hence the delays in licensing another entrant.

ThinSIM [Just a dual SIM but much thinner] - Safaricom did everything they could to stop/delay the process. It took Equity one year to get it into Kenyans' hands. Only Safaricom (not Airtel or Orange) really opposed this. The investment was all by Equity so what parallels are you drawing with Safaricom & 4G? [It doesn't use Safaricom's network for data or voice].

The increase by 300% in charges for bank to/from M-Pesa just after Equity launched Equitel seems suspicious. What's your take?


@vvs, first let me own up to not knowing as much history about GSM in Kenya as you seem to, and so I will avoid saying much on the historical injustices bit. For a start, it is very clear to me why Safaricom would have been the one to make noise; it carries the most money traffic and Mpesa is one of its key revenue streams and its strongest brand, while the others have negligible revenue from similar services.
The parallels I was drawing stems from Equity's desire to ride on Safaricom's services (they may not be strictly called "infrastructure", but they are nevertheless what Safaricom's value is derived from). Why do you think Equity was so focussed on Thin SIM? They have kept saying that it is because they want to ease the burden on the ordinary Kenyan, but it is not difficult to see that their reasoning probably goes thus:
Since they cannot replicate all the services that people get from Safaricom SIM, it is much harder to convince people to move to their SIM even with more favourable money services rates, than offer their services as incremental to Safaricom's by having customers do all the stuff they need to do with Safaricom as well as the additional (and cheaper) Equitel money service.
Wouldn't you agree that this is a form of riding on another's investment? Note that I am not saying this "wrong" for it is likely the pragmatic thing, but I am saying Equity is not the angel and Safaricom the devil. The parallel is that if those services that make competitors' SIMs attractive were common property, then fairness would reign..

And although most people dismiss Safaricom's concerns on security as baseless, from a strictly technical point of view, I have my reservations. IT techies here may know of the Gevey Thin SIM which has been around for years (in Kenya too) and used to open "Locked" iPhones. It is actually a hardware man-in-the-middle (MITM) device that defeats the Telco's protection and allows the iPhone to be used on any Telco. This is exactly the same technology as our much celebrated Equitel Thin SIM and also made by Chinese. Does anyone wonder why we are supposed to be the first country to adopt this technology that has been around for over 10 years? I vaguely remember reading somewhere the defence given by Taisys on security: something like there was no software in existence to exploit theoretical possibilities. There are people out there like Mark Russinovich who if they have motivation would have such software in no time. For a time, this gentleman taunted Microsoft by publicly sharing hidden processes and flaws that MS was hiding until he (and his software Winternals) was acquired by MS and made into a top dog. While MS thought they had proprietary system, Russinovich saw an open system to play with.

And best of all, why is Huawei banned from several countries? Electronic spying fears. But here in Kenya, we give the Chinese official testbed (and access to money..).
Check these: Black Hat Article and GSMA

I have no idea how this will pan out but I get a sneaking feeling that already Equity is having second thoughts on how to advance this (or perhaps technical challenges?). Why aren't they making more noises on winning the war and advertising seriously? Why is the thin SIM costing more than normal SIM?
Oh oh, this is too long but you asked for it smile
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