Showing posts with label Zain. Show all posts
Showing posts with label Zain. Show all posts

Thursday, June 02, 2011

Guide to Lagos

Guest post by MVQ

Intro: Lagos is not the most tourist-friendly city in the world but it does provide a good taste of West African culture and is a "must see" destination for anyone looking to do pan-African business. As locals will tell you, there aren't many sites to see, there are only a few beaches that are tourist-friendly, and the congestion can be quite overwhelming. But if you can get over that, you are in for a cultural treat, an enviable nightlife, and a peek into one of the most dynamic African markets.

Getting There: I took the KQ flight from Nairobi to Lagos and it was actually quite nice and relaxing. Lagos' airport is a blast from the past, it appeared as if it hadn't been updated in decades and upon entry the only sign of modernity is a large monitor with adverts near customs.

The customs process though was surprisingly efficient. Mine was the only flight to have arrived at the time and there were 5 customs counters, with 3 for non-citizens that moved fairly swiftly. You need to get a Nigerian visa in advance to get through customs (give yourself 2 weeks to get the visa, as you must hand over your passport, pay ~$100 for US/UK, $50 for other countries, and prove that you have a destination in Nigeria.) You will also need a yellow fever card

To my surprise I was able to get through customs in about ten minutes - and based on the reaction of my friends though, this is a rare occurrence. Apparently customs is a major pain and you must pay for expedited service (there is some rumor that the expediters and the customs agents may be in cahoots.)

Despite not wrapping my luggage, it came out in one piece. Later I was warned by frequent travellers that Lagos airport is one of the more risky destinations for "open" luggage, so my advice is to try to get your luggage shrink-wrapped before flying into Lagos.

Getting Around: When I got out of the airport, the cab drivers were quite aggressive, and I ended up riding in to the city with a friend. My advice is to try to get your contact in town to send a car for you to avoid the aggressive cabbies. If you can't get a car, then you should expect to pay 5,000 Naira for the 30 minute to an hour long ride into the city.

When in the city the best way to get around is via a car service or taxi. Try to link with a reliable driver, and for newcomers, Red Cab is generally a pretty safe option. Each cab ride should cost you between 2-3,000 Naira ($13-20) if traveling in the Lekki, VI, Ikoyi, or Yaba areas, and you should clarify the price up front.

Do not walk around by yourself at night and take caution during the day, and look out for the Okadas, ("kamikaze moto taxis") which are the fastest, but most dangerous means of transport around Lagos.

Communications: The best way to communicate is via mobile phone, and you can buy a SIM card for prepaid minutes upon arrival. Most people here have two phones from different carriers as the services are known to go out every now and again. I signed up with MTN and was reasonably happy with it; I plugged it into my Ideos Android phone and used the prepaid airtime for voice, data, and to create a wifi hotspot for my laptop. Other major players are Airtel (Zain), and Etisalat.

Hotels: The hotels in Lagos are very expensive as the mid to high end hotel market is sparse. The Sheraton Four Points, Radisson Blu, Southern Sun, Eko, and Federal Palace are probably the most tourist friendly and range in price from $300 to $600 per night.

Getting Around: The people in Lagos are fairly aggressive, but they all mean very well and are generally quite kind. I found that I received amazing hospitality from friends and colleagues in Lagos. The Nigeria pride is real!

English is the primary language in Lagos, though you do hear Pidgin, Hausa, Yoruba, Ebo, and other languages. The best paper to get while here is "The Punch" – and , though there are about 4 mainstream papers, expect about half the pages to be filled with full page ads and "congratulatory" statements about public officials.

Food & Bars: You must try the local food when in Lagos, and specialities like Fufu, Melon Seed, Okrah Soup, Suya, and Pepper Soup are staples. If you like spicy food then you will love the food in Lagos.

Star beer dominates, and you can get a large bottle for 800 Naira ($5.) I strongly recommend Star over Gulder (the other local favorite), as it has a good taste and is fairly ubiquitous.

Electricity: Be warned - power transmission is very unpredictable in Lagos. Even in the most affluent neighborhoods one power outage a day is not uncommon and some areas will go for weeks without power. After the first two outages you will get used to it - just make sure that your phone, laptop, etc. are always charged up!

Summary: Overall, Lagos is a great experience. The frenzy, the opulence, the fashion, the food, the traffic, the beaches, the hospitality, and the excitement are all palpable. Enjoy your trip!

Saturday, October 23, 2010

A to Z Chat with Michael Joseph

Ten days before he retires as CEO of Safaricom, Michael Joseph gave a talk at the Nairobi iHub on his ten years at the helm of the company, on the day to day job, and the up’s & down’s of the job in taking the company from a literal zero to hero.

recap

Beginning: Safaricom started with (inherited) 17,000 customers, 9 cell sites in Nairobi no billing system, switch in extelecom house, 5 Vodafone employees and 55 Safaricom staff deployed from Telkom (not chosen) – all working in a 3 bedroom flat at Norfolk towers . Has little cash (started with $20 million from Vodafone, and paid $10 million for a switch leaving the balance for salaries & rents) and launched on 23 October 200 (Saturday) and on Monday morning network collapsed (blamed on IT person)

Crazy Kenyans; this was a theme in his talk of marketing in Kenya
- Family & friends the average Kenyan calls 2.3 people, a fact he pointed out to his France Telecom (Orange) counterpart when they launched a family & friends promotion in which orange customers could call 5 people for 1 shilling per minute. The (forever) promo has since been discontinued
- Free credit - a promotion to give away all the subscribers Kshs 200 free credit was a major mistake and after it was bungled by an IT person in Dubai, led to 5 days of congestion. Lesson learnt - don’t surprise customers
- when okoa jahazi was launched, 1.7 million applied, even those who had credit and didn’t need it (crazy Kenyans love new things)

Fibre: media don’t understand it, people expect after companies invested millions of dollars in undersea cables, internet prices would drop by 90% next day. They still have to have a redundant network, and network is pensive to maintain. They have 4 cables to Mombasa, and every day (Chinese) road contractors are cutting fibre without any punishment. Since 3 cables land at the same point in Mombasa, they will land points in Kilifi and Dar es Salaam for redundancy
- He regrets not investing in metro fiber 4 year ago, which they are now leasing

Growth
Expectations: Safaricom expected to have 400,000 customers in 5 years, with about 50% of the market (against Kencell’s 50%). Had their first million customers in 2003, second in 2004, and by growing ½ million customers a month, are now a billion dollar company.

The company growing at 20 – 25% a year; he used to report to 2 owners, now has over 700,000 (including his secretary ) who bought shares expecting the price to triple to 20 shillings. Safaricom has to balance their needs and revenue, and are still investing (they have the only 3G network in Kenya despite what their competitors say) while competing with Zain/Airtel’s subsidized/risky price cuts, and Essar who have petroleum and steel.

Competition: the battle with Zain/Airtel is being won: their subscriber numbers have not dropped – and while revenue has dropped, minutes (usage) has gone up as has traffic into the network and they will watch their costs

Finances: With the first $20m spent, they had to borrow money. They were to get a Belgium export credit loan if they bought equipment from Siemens, but since shareholders would not sign guarantees, Safaricom had to pledge their network (which at the time was not strong enough to manage their subscriber base, but when he signed equipment was shipped and this took away their congestion problems (at that time)

Green initiatives: They are greener now than before, have 60 sites running on wind power (backed by generator). Main concern is not their date equipment, but for air conditioning to cool batteries, so are always looking at new ways to cool the batteries – e.g. bury batteries in the ground, and new (but pricey) batteries from Canada that don’t have to be cooled. Their HQ has smart systems, so lights go off when no one in room. They can do more, but local wind generator cost $80,000 , and the ones from India that cost $20,000 are easily toppled by Kenya’s gust winds. They are looking at solar sites, but again need air conditioning for batteries

Investment decisions: They would start in Nairobi and Mombasa then looked at expanding the market. They measure ROI every six months, expect payback form a base station in 1 year – and 80% payback in 6 months. While they outsource physical maintenance - towers, lights, fencing, fuel, power remains a big cost – they have 5,000 generators to run when electricity (KPLC) cuts off

Outsourcing strategy: he is not a fan of this as outsourcing partners don’t reinvest until they have to. He said Bharti Airtel EBITDA in India is down from 45% to 35% this year because they outsourced a lot of key costs, which are now coming back. Safaricom may outsource network management, but not outsource customer care, because quality will drop

Innovation
- They have team of 40 people spend time looking around the world for new ideas, and with the Vodafone group e.g. sambaza was already in Sudan & Egypt - and have had great successes like Sambaza, Okoa Jahazi, M-Pesa and M-Kesho

- innovation without disruption says the company is very innovative in the mobile space and they innovate to make money, not for innovation space, as his goal is to deliver to shareholders. He takes pride that the company has won international awards, in Silicon Valley, not the UN

- local developerswhen vendors want to sell new ideas, Kenyans write to them with their new great ideas, -but everyone, has to sign their legal waiver to protect the company from being sued.
- On revenue share, his belief is that Safaricom should get the lion’s share – developers will be using their airtime, customers, marketing, distributors and collection method so it should be 80:20; if you want to keep 80%, go to Zain. But sometimes people can get good splits with Safaricom e.g. he did not believe ring back tones would make money, so mistakenly signed a deal that gave most of the money to developers
- Safaricom has not stolen anybody ideas – they have been sued a few times and won every times, because they document everything. Also many ideas belong to nobody, and while someone claims they invented m-kesho is his (MJ) personal idea – and Safaricom have enjoined themselves alongside Equity Bank, who are being sued by an inventor

Key decisions
Pre-paid billing: could not afford a post -paid billing system, so they opted to go for pre-paid customers and bought a (cheaper) prepaid system that cost $200,000 – in hindsight was a key decisions
Per second billing: he made the decision to bill per second even though per minute billing generated 20 – 25% more per call. He did not have scientific proof but had seen it in south America and felt his market was the mwananchi (ordinary person) who would use airtime in small increments-
Customer service: was free & 24/7 - which was a good decision because people don’t read phone instructions booklets. it was not very expensive and they hired 200 university graduates. People then were even calling from kencell and today people still call to ask how to send SMS
guiding principle - do it because it makes financial sense. Safaricom needs to be seen as a Kenyan company, with all their spend is in Kenya, unlike their competitors who are purely foreign owned. If Safaricom, has to outsource, he insists that the company have to have an office in Nairobi or he wont buy from them. He mentioned Karanja Macharia of mobile planet has done very well by being a local partner and who won over foreign SMS firms.

Leadership
- best advice was from a boss in Scotland – a leader has to make decisions, don’t be afraid to make them, (e.g. asking people to leave company) and if you’re right 7 out of 10 are right, you are doing well. He considers himself a benevolent dictator, who while he consults internally, makes the decision, he sees external consultants having no responsibility for their advice. He admits he has made wrong decisions (as an engineer in charge of marketing for the company)

when a competitor changes your business plans: don’t panic, and reassure your people; they had studied airtel in Sri Lanka and saw how they came in with low prices and ‘destroyed’ the industry to a level that the government had to intervene. They have had a measured response – they could have dropped prices further, but their promotions are working.

Lessons learnt: (i) you won’t learn anything from a book (ii) have absolute integrity (iii) lead from the front – being a leader is not about being seeing at tem building exercises or having your name on the door (iv) research - if you don’t know what you’re doing, act like you know

M-Pesa
- Vodafone won £1 million DFID (UK) award for deepen financial penetration for the unbanked, which they also had to match financially – and they were to develop a system for the disbursement and repayment of micro finance loans. They tested in Thika for 6 months and realized that it had more potential as a money transfer tool, and they launched M-pesa in March 2007.
- M-pesa success has not come from technology, but from the distribution network –(20,000) points around the country

Role of government
- GoK should play an enabling not punitive role as a regulator. But what is enabling about getting a license? Vodafone paid $55m for license to operate in Kenya, and another $25m for 3G. Their competitors have failed to beat Safaricom and run to the government to complain about safaricom’s dominance. Safaricom opposed the CCK regulatory rules as unfair – and he wondered why EABL, Bidco and Kenya Airways (all with 80-90% e) were not subject to such rules – and why the government was sending the wrong signal to investors by seeming to crack down on Safaricom
- Right regulator ICT is going to create jobs, and has a good PS now, but GoK has to pick the right people to run the industry, not people who happen to be married to a relative of the president or come from his town (he said he told this to Kibaki and got a good laugh)
- Kenya as a BPO centre Kenya should be careful about investing heavily in this as a pillar of vision 2030 as this as it is l very fickle, and there is no loyalty you’re the flavour today, but what happens tomorrow? Can’t rely on time zone and English speaking skills, as companies will still take away their business to the next country to offer an incentive or when things go wrong. E.g. delta air moved their outsourced customer service from India back to US, when customers complained they could not understand the CS agents

Safaricom vs. Banks
- M-pesa is unregulated; when they got into it, there was no law coveting that, but they sought and got ‘blessing’ from the mobile and banking regulators.
- Big (foreign) multinational banks who had shut down rural branches abandoning their customer opposed m-pesa and fought in government & parliament and would have succeeded till he persuaded acting finance minister John Michuki to green light m-pesa.
- M-kesho allows people to save in small increments, and get interest immediately is a revolutionary product (he came up with), and in 3 months new 700,000 savings accounts, (which was more than all the saving accounts that existed in the country – and money that was not there has moved from the informal to the formal banking sector). On M-kesho had to partner with a bank (did not want to hold people deposit/too much regulation) and signed on with Equity Bank who have nationwide reach to make it work and took the risk. This exclusive deal which ends in May 2011
- Warning to banks he has told the banking community that retail banking will disappear in 10 years time. Customers will not go there (to brick & mortar branches) except for loans, as ordinary banking will be on mobile phone whose convenience is unprecedented. E.g. The biggest transaction days for mpesa are when schools reopen (previously people would be queuing in banking halls for expensive money orders)

Social Media: - He is not a fan of social media because people can take advantage of anonymity to write lies about him. He is not on facebook or twitter, but his successor is, and the company uses these tools a lot for marketing
- SMS is a very dangerous phenomenon – and during Kenya election violence, they found many of the hate messages did not originate in Kenya, (came from south Africa). Safaricom responded by ending out peace SMS to subscribers, which was also controversial

Tuesday, August 31, 2010

Reading the Safaricom Tea Leaves

Post two of three: Safaricom has been one of the most progressive companies in terms of investor relation’s management, largely because of the cost of their large shareholder base. They spearheaded move to avail electronic instead of printed annual reports and payment of dividend by m-pesa, as opposed to cheques which were unviable for many shareholder who had the bare minimum of shares. Another benefit of electronic reports is that they are easier for potential investors to obtain (some companies print as few reports as legally possible and they don’t circulate widely)

Inside Safaricom's 2010 A/R

Shareholders: - Safaricom has 787,363 shareholders down from 828,912 in 2009
- The Government of Kenya has acquired more shares in the company despite a stated move of divestment. This year they have 22 million more shares, going up from 35% to a 35.06% stake
- Overall there are more foreign buyers of Safaricom shares, but NSSF Rwanda may have exited
- Director Esther Koimett bought 517,600 shares, and chairman Nicholas Nganga has 850,100. Outgoing CEO Michael Joseph and Finance Manager Les Baille each own 2.5 million shares, while their replacements, Bob Collymore and Chris Tiffin have none
- Last years’ AGM (the first since NSE listing and prominently advertised as having no handouts or frills) was attended by just 2,182 shareholders.
- 180,000 shareholders got their 2009 dividend by m-pesa (mobile phone payment)

Performance - Revenue breakdown of the 83 billion ($1 billion) in revenue voice accounted for 75% (2009: 83.4%), with SMS and other data at 9.7% (2009: 8.8%), Mpesa at 9.0% (2009: 4.2%) and equipment sales at 4.4% (2009: 3.3%). Revenue growth was 8% for voice, 32% for SMS/Data and 158% for Mpesa n all categories was positive with voice at 7.8%, SMS and other data at 32.4%, 58% for equipment sales and 158% for Mpesa
- North Eastern Kenya region is growing by over 200% owing to improved security

Other Numbers - Earned Kshs 7.6 billion ($95 million) from m-pesa (up from 2.9 billion in 2009)
- Has Kshs 10 billion ($125 million) in cash and short-term deposits, up from 4 billion the year before. Safaricom earned interest income of Kshs 350 million in the year
- Borrowings comprise 6.28 billion from a consortium of banks, 2.3 billion from one bank, and 7.5 billion in corporate bonds
- Have 2,000 dealers and 200,000 retailers
- Pay income tax at 27%, compared to 30% before they listed at the NSE

Staff - Launch ESOP in 2009 with 101 million shares and which will be issued in 2013. 2165 staff (88% of total) have joined the scheme
- Key management were paid 522 million (up from 438m)
- Of their 2,470 staff the company has an almost equal ratio of male and female employees

Fibre/Data Investments: - are investing 890 million into Seacom: they paid 316 million and balance of 573 million is to be paid over the next 5 years
- Paid 2 million to TEAMS for a 22.5% stake (other shareholders are GoK and Telkom both with 20%)
- Paid KPLC Kshs 116 million as part of 290 million for use their power network for fibre distribution over the next 20 years
- Bought packet stream data networks, for wimax,for Kshs 373 million shillings, and has lent Kshs 600 million to One communication (in which they own 51%)

Customers - their internal customer delight index had a measure of 7.38 last year against a target of 7.76
- Its true that premium customers get better customer service - there is a platinum line at call centre to service platinum (high end) customers on a prioritized basis (i.e. even by calling regular customer service free help line, ‘100’ they get through and served faster
- Safaricom business has over 2,000 customers including airlines, media houses, banks
- Mobile data is responsible for 90% of data revenue
- customer growth (their measure) Safaricom took up 65% of new phone lines in last year
- website: Safaricom the most progressive companies in online investor relations in terms of results and investor briefing posted on the web site and now dividend payments by mobile phone. It now uses twitter & facebook accounts, to promote its services and also try and (slowly) responsd to numerous customer service and product queries posted online

Rival disclosures: Safaricom’s main rival is Zain Kenya - and while it is not a listed company, the former Zain parent was listed on the Kuwait Exchange, and used to produce some extensive reports on their African operations - ranking individual countries by revenue, profit, subscribers - which was information that the local Zain office did not typically share. Similar information can also be gleaned from Orange of France about their Telkom Kenya operation.

Zain Africa sold to Bharti Airtel of India and while a financial quarter is yet to pass since the takeover, it appears they may follow the trend, as they are also a listed company with segmented reporting requirements. For Kenya in July 2010, they note that:

- Airtel Kenya has been given additional frequencies that enable it to offer 3G services
- All operators will have the right to borrow funds from the universal service fund (a fund that will comprise 1% of mobile operators annual turnover) and to use to set up infrastructure in the identified rural areas.
- Kenya companies are Bharti Airtel Kenya B.V. (name changed from Celtel Kenya BV), and Bharti Airtel Kenya Holdings B.V. (name changed from Celtel Kenya Holdings BV)

Thursday, August 19, 2010

Bharti Airtel in Kenya

Zain/Bharti shake market: On August 18, Zain Kenya announced new unprecedented low rates for voice calls and SMS in a new tariff war. The new rates for calls of Kshs 3/=(~$0.04) per minute and for SMS of Kshs 1/=(~$0.01), which apply across all networks and are available to all Zain customers, easily trumps their main competitor, and market leader, Safaricom whose rates hover around Kshs 8 for a phone call and Kshs 3.50 for an SMS (and 12/= and 5/= to other networks for the same).

True cheap rates: The new rates have been well received with very popular comments online and a rush by consumers to obtain Zain lines or re-activate old ones. CEO Rene Meza called this a new long dark journey to market dominance [i.e. from 10% now] and one they will tackle aggressively for the long term. But is it sustainable? The last time Zain engaged in a price war, they ended in a bloody loss, with Zain gaining customers but not market share and $90 million in the red.

Airtel Strategy : However Zain Kenya is no more. The push comes from new owners Bharti Airtel of India who completed their takeover of the Zain Africa Group last month and will rebrand the company (in Kenya) by October 2010. They have also set out to re-position the local telecommunications sector in tandem with Essar and France Telecom by lobbying the government for other changes to level the playing field in a market they believe is unfairly dominated by Safaricom and which denies Kenyans true freedom of choice.

At the official launch in July, Airtel executives the emphasized some of their strategies including:
- They are rural focused and will build a rural brand through farming related promotions and CSR activities
- Be a low cost operators; employ low skilled sales force
- Lobby for number portability
- Push for lower interconnection rates which will lead to affordable products
- Lobby for infrastructure sharing i.e. no need to have 5 cell phone towers in a small town (all incurring electricity, security, cement, other charges) town when 1 will do with all Telco’s sharing transmission and fibre
- Work with ecosystem partners, like HP and Eriksson, and have a BPO call centre

Will the government deliver on low connection fees, number portability and infrastructure sharing? At the launch Meza mentioned that the Communications Commission of Kenya (CCK) had lowered the interconnection tariff from about 4 to 2 shillings effective September 2010.

Short-term losses: Meza said they plan to grow revenue and subscribers, and margins and profits will come later from operating a lower cost structure. And in a back stab at the previous owners (and perhaps minority shareholders), he said for the first time in eight years they have shareholders with the right mind-set to allow them to take opportunities in the market, increase rural penetration and utilise the right technology - by investing Kshs 24 billion (~$296 million) in the next 18 months on rural cell phone sites, revamping their zap money transfer systems, increasing their outlets & distribution network, expanding their 2G network, and rolling out a 3G network by the end of the year (since the license fee was reduced this year, they will be able to cover more parts of Kenya than just Nairobi and Mombasa)

Improve on Marketing: Marketing has always been a weak point at Zain, who keep throwing out too many confusing promotions one after another after another. The Wednesday Nation had a full-page ad for the new Zain (3/= and 1/=) rates and on the adjacent page was a small story touting a tariff for Zain ‘Club 20’ subscribers who could now get free calls and unlimited SMS from 11pm to 6 a.m. within the Zain network only! And all this comes a month after they had launched anotherrevolutionarypromotion. Hopefully this will hopefully change with the recent marketing executive appointments and re-focused brand and strategy.

EDIT - Other Developments
- Zain accuses Safaricom of sabotaging its new price offer
- Safaricom reassures Zain over inter-connect capacity, and says their concerns are premature.
- CEO's e-mail exchange between Rene Meza (Zain) and Michael Joseph (Safaricom)
- Safaricom launches Masaa tariff with prices of Kshs 2-4 for Safaricom calls and Kshs 3-5 to other networks.
- Orange (France Telecom/Telkom Kenya) make their low cost pitch with Kshs 2 and Kshs 4 for on and off net calls respectively, with free on net calls from 10 AM to 5 PM for Kshs 100 per month ($1.25)

Wednesday, May 05, 2010

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 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 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%?

Thursday, January 07, 2010

Twitter Week: January 7

Here’s a summary of my week on Twitter in a top 5 format covering traffic and restaurant woes

5. Raring for the World Cup in South Africa: - ESPN to broadcast 2010 world cup in 3D http (via Business pundit)
- Thinking of driving to world cup in SA? AA of Kenya offer (i) car passport (ii) international driver license (iii) COMESA insurance; r/t @bugzville58 good idea you should though Kampala bus is also offering a trip for about 800 dollars one way.

4. Traffic in Nairobi was Good and then Bad: - Nairobi should remain like this: no traffic, or queues and faster bandwidth. Lets close Thika & Nakuru roads and #devolve the rest to shags

- Back to 5 day week and a matatu strike in Kenya to kick off 2010; ying yang: Nairobi public transit strike means booming business for taxis (good luck getting one this evening); r/t @tmsruge I was in the CBD today. All streets were a parking lot. No point taking either as you won't get anywhere. #footing works best! ; Roads not so bad out of town 30min stationary then 10 min cruise home #matatustrike
- R/t @MoSande KE Matatus call off nationwide strike after PM promises to address their grievances. Normal service to resume immediately
- @inexes and i hear someone may be ending Mombasa vacation this evening #nairobitraffic; @karuoro someone just flew in from Mombasa holiday

3. Odds and ends: - From Nairobi Star: statehouse complains about Lucy worst dressed rank, while Atwoli is scandalized–says his peers in 150 wool class are Moi & Kirubi
- The Tamarind Group has taken over the Karen Blixen Coffee Garden Restaurant, which is renamed Tamambo KBCG
- Repeat of 'House of cards' showing on CNBC Africa. Documentary should be done on Nairobi or Nigeria shares bull run and bust
- Books first have buy pizza in happy hour, get one free. But also charge Kshs. 100 for take away pizza cartons - why?

2. Safaricom mandatory SIM registration, and costly 3G: - Via @kahenya solutions to improving mobile competition in #Kenya, and break #Safaricom domination of #3G http://tinyurl.com/y8bs9cl
- via @kainvestor #Safaricom forcing new users to register their sim cards, which can't be activated unless registered with an ID ->safcom=Gok r/t @LarryMadowo Its now a legal requirement for ALL SIM card holders to be registered & #Safaricom move is only the 1st step but @LarryMadowo @kainvestor Safaricom already has 1/2 their subscriber details from m-pesa accounts
- Can’t find a reliable #zain #zap money transfer agent in Kenya? Try the local post office or #posta (via #introverted blog post)
- Consumers getting unhappy about #Safaricom #internet bundle costs http://tinyurl.com/yzxjt25 but they rarely leave @archermishale the word is out, be careful how you use expensive Safaricom data bundles - are they billing on supa ongea tariff?

1 It's 2010: Happy New Year: Against sound advice, went out and got served a crap lunch. Remember waiters & kitchen staff are working, not celebrating the holidays
- Best food prayer I’ve heard '. . Also for the wonderful meal, bless the pockets that may have been depleted by it'
- Looking at the @KenyaBuzz year end calendar - Pole Dancing Competition at Tembo Disco Mombasa http://tinyurl.com/ya786td

Wednesday, December 23, 2009

Twitter Week Top 10 December 22

Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter in a Dave Letterman top 10 format covering tech events, new planes, sluggish car sales, strange naiorbians and other topics

10 Mainstream Blogging: #F1 blogger quits work to blog full time-best wishes @f1fanatic_co_uk! http://tinyurl.com/yegm5l3
- Great reads: the 75 best business-blogs of 2009 http://www.businesspundit.com/the-75-best-business-blogs-of-2009/ includes @emeka_okafor

9. Tech Nairobi @whiteafrican is live blogging from @AfricaGathering today, refresh this post for the latest: http://bit.ly/75WgJ3 #agathering #agnairobi09
- Look out for @afromusing's guide to buying solar gadgets.(via @sciculturist) <-----it's about time! #giftsforocha
- Stealth Startups, Get Over Yourselves: Nobody Cares About Your Secrets http://goo.gl/fb/hLw6 (via @rafiq)
- R/t: on the @ushahidi blog - 3 misconceptions about #ushahidi

idle castle brew facility

8. Brew Chatter SA giant beer brewer SAB considering re-entering kenya market after Deal with EABL in tanzania sours (Via @Nairobi star)
- konyagi vs waragi http://chickabouttown.com/2009/12/20/konyagi-vs-uganda-waragi/

7. GoK Absurdities 1. We dont accept sealed letters for PS, unless you have delivery book 2.This gate is locked between 9am and 4pm
- Harambee house is a corruption free zone, @SupremeGREAM - and so is a police roadblock #nyayohouse
- So new Police comm. Iteere got the 3rd class Moran/Golden Heart of Kenya; but so did Pauline & Ida
- Labour leader Atwoli sermons on #citizentv opposes privatization of #nationalbank #KCB #newKCC and kenya ports authority

6. Plane Chatter- know everything about today's maiden boeing 787 flight (weather permitting) http://tinyurl.com/yewg5pl (via @flightblogger)
- 787 has taken off, take that copenhagen. R/t @coldtusker #787 is supposed to have a lower carbon footprint so supports #Copenhagen goals
- via @FlyingEmirates a Kenyan wins Emirates A380 dream prize (to Bangkok, Sydney or Seoul ) <----i'm so jealous! http://bit.ly/8yKvNA
- @coldtusker @alykhansatchu crown will fight to keep emirates independent as long as it can (perhaps pare down new plane buys to do so)
- #onejetone among airlines appying for licenses again - mombasa, harare, london
4:43 PM Dec 18th from web

5. Investor Awareness - ICT Kenya board tender for digitization of court records http://www.ict.go.ke/images/pdfs/6593719R_2.pdf @kenyanpundit
- Securities Industry Training Institute launched in Uganda-progs on capital markets,corp.fin, asset-mgmt, entrepreneurship, corp.govnance etc
- Send Nairobi Stock Exchange complaints by SMS to 8485, cost 10/= (also to receive) http://www.nsecomplaints.co.ke/ (via @NSEKenya)
- r/t @alykhansatchu Kenya Economic Update 2009 from the World Bank http://bit.ly/90sYCp simply definitive and full of Data that will surprise
- On CitizenTV 'how to be rich' is a golden dream prod .i.e @alfredmutua – they had ad for cobra squad season 2 DVD as perfect x-mas gift

4. Cars, Cars, Cars - r/t @SupremeGREAM today i was at biggest car yard on ngong rd and the only people there were salesmen, wash guyz and suppliers-grim(econ)! are you seeing some slowdown in autos? soe eyards have KBE and KBH that are gathering dust. - got a KBC Mark II been in the yard that long. today took it for a random drive. 780k bring the money. down from 1050k @inexes - Wambie wapunguze bei ya hizo magari! lol @bankelele
- r/t @Shitawabah saw a LAMBOGHINI today morning at 8;59 a.m yellow KBK 001A... ! eeeiy ! * but nid t say it was hot! <--wow! really? pics?
- r/t @karuoro If you own a Toyota-use toyodiy.com to look up part numbers so you know what to order (thanks-1/2 cars in kenya are toyota)

3. Peculiar Nairobi - @mountainous nation wrote that the only 3D theatre in kenya to watch #Avatar is in Nyali. Also #F1 off-season more
- Reading sundaynation about kayamba africa new album: ' KA is made up of 45 members who were all present. It has 6 band members' (huh?)
- My dad was scandalized by the food portions at ONami, full house though
- Labour leader Atwoli sermons on #citizentv opposes privatization of #nationalbank #KCB #newKCC and kenya ports authority
- Family bank atm's are so f'n unreliable these days. Spend some of that rights issue cash propely will ya? #gotissuez
- Peculiar habits of Nairobians http://sogomo.blogspot.com/2009/12/ten-nairobi-pecularities-i-could-do.html

2. Credit Crunch - @coldTusker wouldn't be uchumi be a better pick for al-waleed 'distressed asset' philosopy? @coldtusker - I think Al-Waleed looks for management as well. Kingdom doesn't supply management. Maybe he will look at Uchumi as well
- At empty local; not sure if its mid-month economy or competition from new joint up the road with #kidum playing tonight
r/t @siphojanuary More than 8 million South Africans are 3 months behind on their debt repayments - National Credit Regulator
Dubair/t @ coldtusker Read the signs. The day Emirates stops serving alcohol means the new owners are in control. Dubai may keep Emirates in name only. Who knows who owns it now? Not for public consumption. - There is no free lunch. Something has to give. I think Emirates is the 'guarantee/collateral'
r/t @alykhansatchu Dubai = Ozymandias Look on my works, ye mighty, and despair!' Nothing remains http://bit.ly/1wWz2g

1. Phone Woes
Safaricom I thought my phone had gone schitso calling me every minute! But its some dude who sent big #mpesa to wrong number one digit off (not me!)
- dear #safaricom there are black hole spots (no service) in Nairobi CBD #gotissuez
- Safaricom have had a really crap network in Nairobi CBD all week. Only way to call their subscribers is by using zain or orange
- #barclays call centre number works and calls picked up instantly 3900000 #safaricom should learn http://www.moseskemibaro.com/?p=763
Zain #ogilvy media clarify that they are NOT repsonsible for advertising & PR of #zain africa #passthebuck #itwasntme (via @NationMedia)
- R/t @JustDes - #Zain PR and Advertising is handled by #ZKAdvertising. #Zain Media will be handled by #OgilvyAfricaMedia. @PeterNjenga - Any URL for this #Ogilvy media #Zain Africa #advertising thingie? Wanna know who's getting paid but screwing up Zain #marketing?
- @JustDes thanks for clarifying about ZK and Zain http://www.zekgroup.com/index.php?option=com_content&task=view&id=6&Itemid=10 @peternjenga
mobile phones need messengers - Paying telkom,kenya power and safaricom bills this morning-if you are post-paid anything,you need a messenger to hoof around Nairobi - Where can one pay safaricom post pay bill on sunday, other than westgate?
- r/t @tmsruge True, because banks won't allow transfers to mobile, which I think is another missed rev stream 4 banks - Sounds to me like a biz opportunity to me! Kenyan mobile $$ innovations are a bit one-track minded!
r/t @zulusafari even with mobile $ you still have to physically visit an office to put $ in ur account - seriously! it's ridiculous. And why can I not pay by cc'd online!!!! @whiteafrican
r/t @ kahenya @whiteafrican @bankelele it keeps messengers busy and employed
r/t @whiteafrican which makes absolutely no sense in this day and age of digital money transactions locally.
competition for MPesa r/ @ Obopay Essar Telecom Kenya & Obopay Launch Mobile Money Transfer Service http://su.pr/21Vq0y

Thursday, November 26, 2009

Twitter Week: Top 10 November 26

Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter in a Dave Letterman top 10 format :

10. Uganda Talks
- r/t @UgInsomniac Uganda Government gives ousted Thai Premier Thaksin Shinawatra, a new UG passport- http://bit.ly/7xfU8t/ (Kenya sold him wildlife)
- R/t @UgInsomniac MapSwitch Uganda boldly going where no banks have gone? http://mapinternational.net/. #ugandalug

9 Visa Place burns
- What's that fire in upper hill area?
- @rookieke was visa place on fire, poor chicken
- @jwesonga shebeen great place, good staff. And in Kenya style, it will be packed tonight, if it survives neighbour fire

8. G4S (in) Security Jokes
- A g4s truck parked by road side in kile-any missing cash today?
- Poor #G4S Kenya, after the weekend cash loss, they may have to sweep key staff and revert to old name securicor
- @coldtusker @mwirigi #G4S not to blame, customers move $ for evasion, business & commodity payments etc to bypass currency restrictions
- @mwirigi looks like real world inside job-at either G4S, seller, buyer or bank. Off to watch reel-world #heat movie this aft
- Embattled security firm #G4S hires Gina Din Comm. to spruce up image (via Nairobi star)

7 Kenyan Banks
- #stanchart bank loan hawks out on Nairobi streets again. Also KCB and family bank
Kenya MFI Faulu acquires insurance broker http://www.faulukenya.com
- Will check out family bank offer of free Wi-fi for customers’ next week @jwesonga

6 Zain Kenya
- Seems Zain Kenya turned on their 3G network this weekend, super net speeds (Via @kahenya)
- Zain Q3 'Kenya is a highly competitive market with very low ARPU' 2.1M customers (down 14%) revenue of $118m, loss of $28m (much improved)

5. World Cup 2010 business
- @AirFranceUS promoting World Cup fares (from Paris) to South Africa. Book early and save! http://ow.ly/FjUk
- r/t @cnbcafrica 2nite on Business 2010 exclusive license deal between FIFA & Nederberg Wine Estate to produce a 2010 FIFA World Cup wine range

4. Africa Aviation
- Delta Air has Ghana Nigeria Liberia Senegal Egypt but no Kenya plan http://airlineroute.net/200... (Via @airlineroute)
- Ethiopian Air CEO talks aircraft choice A350, B787 B777 operating from high altitude Addis http://tinyurl.com/yffkkpc (via @flightblogger)
- Kenya airways offering diploma in airline passenger services at a cost of $1950.
- R/t @aschonland delta passes half connectivity mark- 51% of aircraft fleet now have wi-fi

3. Safaricom Modem discount
- #Safaricom deal data push discount – modems now redeemed at just 2,000 bonga points, used to be 10,000 before @kafainbi @antoneosoul
- @Kafainbi website and posters say 10,000 but modems are now 2,000 bonga points - try Moi ave. or I&M for stocks

2. Kenyan Corporates on Twitter
- can the real Kenya airways please stand up!!.. @kenyaairways and @kenya_airways on twitter, is one a squatter or both? (Via @jwesonga)
- Following @samtwit and @coldTusker as they sort out which is the genuine #kenyaairways twitter account. They could both be fake or fans
- @samtwit confirmation should come from a twitter link at the #kenyaairways site. A smart aviation buff can fake a corporate twitter ac
- @KenyaAirways is the official #kenyaairways twitter account. (@coldtusker, @rafikikenya - via semi-official source)
- Finally an indigenous Kenyan bank on twitter @familybankkenya

1 Tusker brewed in Ireland
- Tusker now sold in 500ml cans, cost 85/= at uchumi. @archermishale get well, and catch up with @inexes

- The Tusker 500ml can is brewed in Ireland! EABL #Fail #godblessthierryhenry

Thursday, October 15, 2009

M-Pesa as a low cost bank account

Safaricom have extended the registration deadline for m-pesa divided payments via cell phone to today - October 15. Over 465,000 of their shareholders own less than 1,000 shares, and will get a dividend payment of less than 100 shillings ($1.31), with most in this category likely to get about shillings, assuming they have not bought any shares since the IPO allocations.

M-Pesa's latest offering
During the dividend registration process, Safaricom has clarified that shareholders receiving dividends of less than 100 shillings will only be able to buy airtime with this, while those with larger dividends will be able to withdraw the cash, pay bills, send it to other people etc.

All this brings up the question that has been asked several times, most recently by research group - CGAP in the blog post cell phone bank accounts as an incentive to save money. If you compare holding cash in an m-pesa account, you are able to gain comparable benefits to low cost bank accounts offered at several leading local banks – and can use banks for those services that M-pesa or Zap (from Zain) don’t have e.g. withdraw cash via m-pesa, and go to Equity Bank and buy a banker’s cheque for 50/=

Benefits of m-pesa banking
- 24 hour banking: More reach & access than any bank or ATM network
- Mobile banking with operator tends to be cheaper then mobile banking via bank provided services
- Saving in transport costs and banking transaction costs
- Can pay a variety of bills for utilities at a low cost
Challenges of m-pesa banking
- Lack of float at dealers to transact/occasional mpesa system downtime
- No credit history; and the clumsy expensive statement from Safaricom not useful yet
- Calls for discipline to build savings
- Funds are not insured, and are more prone to crime. And dealing with a stolen phone in Kenya is not a pleasant experience.

Anyone tried to use m-pesa as their main bank a/c?

Monday, September 14, 2009

Kengen & other Nairobi Bonds

Lots of questions abound about whether its time to invest in bonds at the Nairobi stock exchange. From late last year when Mabati Rolling Mills launched a bond, 2009 has really been the year of the bond with the clincher being the successful Kenya government infrastructure bond of February 2009.

Now ongoing now is the Kengen PIBO for which Kainvestor reviews the prospectus. It offers a 12.5% and the minimum subscription is 100,000 shillings (~$1,316)

Next expected next is a Safaricom bond, a Centum bond ( 2 billion), and more tranches from CFC Stanbic and Barclays. It’s quite a turnaround from 2007 when companies like Athi River Mining, Safaricom and Celtel Kenya (now Zain) all redeemed /repaid bond investors at a time of low interest rates.

Track all the corporate bonds at the at the NSE daily bond report and these include East African development Bank, Barclays, Faulu Kenya, Mabati, PTA Bank, Athi River Mining, Sasini and CFC Stanbic

Buy bonds directly from stockbroker agents, but if still unsure of the process, consider investing through bonds funds such as those from Old Mutual Kenya and Dyer & Blair Investment Bank - Kachwanya reports that investors can even access the Kengen Bond at ½ the prescribed price – paying just Kshs 50,000 (~$650) instead of the subscription minimum of 100,000.

Stocks versus bonds? in the long run, as shown by this stockskenya thread, shares are likely to out-perform bonds – even the generous 12% Kengen bond.

EDIT also on offer is Uchumi Bond/10% convertible shareholders’ debenture is on. Press reports say it was valued at 12 shillings each by KPMG and is available at a discount of 10/= to shareholders of the company. The funds raised will be used to restructure the balance sheet, which shoudl lead to the end the receivership, and re-listing of the company’s shares at the NSE.

Uchumi Financial Results

published by Specialized Receiver Manager – September 2009

Friday, September 11, 2009

Week on Twitter (September 11)

Another re-cap of a week full of Twitter - @bankelele posts which included issues like - more innovative loans from Equity Bank, why do Kenyan companies make such large PDFs? The fibre cable has reached Mandera in remote Northern Kenya, but piped water is yet to get there, police dogs sniff grass, Zimbabwe ministers text like teenagers, how to get through to safaricom’s notoriously inaccessible customer service, mobile companies know how to keep Kenyan ministers happy, Kenyans laugh at their failings, pre-paid internet gets cheaper, another bank to list at the Nairobi stock exchange while another joins twitter, more awards for women, more jobs at the central bank of Kenya, and the UNEP toys with Kenya

- @TChenya @KumekuchaChris was just at Equity Bank; amazed they have loans for water tanks http://bit.ly/AoYg4
- This #Safaricom portal is going to be the Kenya borg http://portal.safaricom.com...
- Do cops favour their own matatus, leading to traffic jams for other motorists? http://www.coastweek.com/32...
- R/T @baldaufji #Zimbabwe minister text messages leaked http://bit.ly/2KkUIx U c the strait jacket vakuru [old man] is being given 2 wear
- The koinange family starts development of the parking lot next to kencom Nairobi
- Just registered to get my Safaricom dividend by cellphone m-pesa in November @saitonne m-pesa dividend registration ongoing around the country till 30 September, mostly at supermarkets - which one is near you?
- Cold call from a bank offering an unsecured personal loan at 24%!
- @egm_photo @jmugambi its soooo wrong for fibre cable to reach mandera before piped water!
- Gabon09 election resembles kenya08 but little concern in Kenya
- #TPF3 Tanzania is 0-2: EABL endears itself to that beer market
- (Sad to hear) R/t @estoni #samburu insecurity rife, tourist vans attacked, some travel companies are canceling Kenya safaris
- @kainvestor the most blatant on-going copy cat is 'citi shuttle' aping 'citi hoppa' with same green, same routes #thuo should do something
- (i) #shagslife a police dog from anti-stock theft unit just tracked down some stolen bales of hay to a nearby compound (ii) Hay and fencing was 'stolen' from farm of local MP last night. @coldtusker, this police lassie did an impressive job over many KM
- More bank for twitter @Standardbankgrp the official account for #stanbic (found at @kainvestor)
- R/t @saitonne are you stuck trying to call #Safaricom customer care 100 number? Try adding some zero's and no's e.g. 1000055
- R/t @kachwanya Yu to launch money transfer service on October 1. (Now where's telkom, been almost 5 years in the making?)
- Watching morning news - #Safaricom seem to trend #CSR projects to home area of sitting communication minister
- Family bank march to listing at Nairobi stock ex @nsekenya on with plans for share split and rights issue pending approval
- you know you’re Kenyan goes viral (i) #youknowyourekenyan when you understand (and agree with) Francis atwoli (ii) #youknowyourekenyan cause your "najivunia kuwa mkenya" cap is made in china

- NHC rescinds sale of houses to 102 #madaraka estate residents (for non-payment?) while NSSF threatens to repossess some tassia-embakasi plots
- @ kainvestor how do Kenyan corporations create such huge huge PDF? E.g. quarterlies from NSE site (i) Mabati Rolling Mills half year results (large PDF) http://tinyurl.com/ldyk22 (ii) @kainvestor #KenGenPIBO information memorandum dead D link on site at http://www.kengen.co.ke/PIBO/
- Nominate an African woman achiever for a Graca Machel award http://www.civicus.org/media/Graca_Machel_Initiative_Call.pdf D/L 30/9
- R/T @gishungwa @shiroh: Central bank of Kenya is hiring http://tinyurl.com/lu6bbo
- @inexes @shiroh while standard chartered will take divas to South Africa for shopping for $1,000, family bank has week-long trip in October for business customers for $2,000
- Eh @intelligensia, plans underway to (dredge &) raise the water level of masinga dam by 1.5 metres
- New Zain Kenya unlimited pre-paid internet bundles costing $3 per day, or $30 per month
- NTV's Rita Tinina on GoK begging UNEP for Mau Cash http://bit.ly/2m8BUu (look for a toy truck near end of vid)

Wednesday, August 26, 2009

Money Transfer in Kenya Evolves

Part 5

Since the last look at mpesa developments in mobile money, there have been another raft of new deployments as Kenya’s two main mobile companies – Safaricom and Zain who have been signing up partners for their respective MPesa and Zap money transfer platforms. Here’s a recap

Banks using M-pesa: Commercial banks have been long whispered to have a lot to fear from m-pesa but I disagree. Yes bank are going to have to step up and use the mobile phone to reach their customers better, and they are in a better position to do this than mobile companies. Mobile money itself is not the sole reason for the loss of relevance of some banking products since fraud, insecurity, transport costs and transaction costs have also contributed e.g. banker’s cheques have been plagued by fraud which means that banks now subject them to the usual 4-day clearing cycle, while landlords and schools now ask clients to deposit funds in their (own) payee accounts and furnish deposit slips as proof of payment.
Banks have gone the option of launching their own mobile applications for their customers including include Barclay’s m-money and these include Barclays, Equity, Family Bank, ABC and others. A few others have gone on to collaborate with mobile companies. Two notable ones are:
1. Consolidated Bank whose customers can transfer money from their bank accounts to m-pesa
2. CFCStanbic whose customers can pay their suppliers by mpesa from their bank accounts: more here

Investor Relations: Pay Dividend payment by mobile phone - last week, Safaricom shareholders approved the payment of dividends from the company to their fellow 830,000 shareholders via m-pesa. This will happen in November 2009.

More corporate partners a glance at Safaricom mpesa list of partners now includes airlines (jetlink, safarilink, east African safari air), micro-finance institutions (Kadet, Kenya women finance trust), media houses (Nation Media Groups to pay for classifieds), KBC, Family TV, , banks (ABC, CFC, Family, Postbank), government agencies (youth enterprise development fund, national hospital insurance fund, higher education loans board) , and several insurance companies and SACCO’s (savings & credit societies)

Airlines last is the airline, because it shows again, the difference between zap and mpesa. Monday’s Nairobi Star had an advert from Jetlink showing that their passengers could now pay for airline tickets by M-pesa– up to the maximum m-pesa limits of Kshs. 35,000 ~$500.

That should have been the end of the airline section, but I was reading the latest issue of African Business magazine which had an interview with Tito Alai where he mentioned that Zain had signed up Coca Cola, and – Kenya Airways (KQ) saying “a passenger can book a KQ ticket online, pay by zap, and check in at airport with his mobile phone” great right? But Kenya Airways have not launched this program – and their customer care told me to only pay by cash or credit card. Kencell/celtel/zap have a history in Kenya of coming up with innovative products, but Safaricom market/apply theirs better. Is this another case with KQ? That the company is up for sale (again) is not a positive sign for development of new partnerships & products. Then on the news of August 24, it was reported that Zain Kenya had launched 3 Zap applications - zap distro (web tool to manage dealerships), zap transact (collect cash from numerous sources direct into bank accounts), zap master pay (ease cash administration - so a company pay up into up to 1,000 zap accounts at a time). Maybe now KQ and Coca Cola will reveal their plans for Zap

User innovations:
But as many innovations as the large corporates come up with for mobile money, the users are the ones who will come up with the innovative, creative ways of adapting them to their lives. Here are a few examples

24 hour M-Pesa had a lunch at a joint that had a rather rude manager, after he spotted me taking a picture. Anyway, many mpesa dealerships tend to close at 5PM, while others like Uchumi (supermarket) can do transactions up to about 8 PM. But now bars, who are open for many more hours e.g. Taidy’s (Nairobi west), are offering 24 hour mpesa banking.


Overcoming challenges Also, while the country is ongoing a power rationing for the next few month, M-Pesa is largely unaffected, as it is not dependent on electricity which the banks are. But M-pesa down time & system outages, agent, and lack of float for several hours a day may compromise its integrity in the eyes of consumers, who may see Zain’s Zap as a reliable back up channel

Money transfer across networks: since their introduction, the mobile companies have been walled in I.e. M-Pesa can only be sent to Safaricom customers, while Zap money to zain users. There have been calls for cross-network transfers to be allowed, with appeals to the regulators (CCK, CBK) to force this to happen. But in this market regulation trails innovation, and this wall has been broken down,- as explained by @Gishungwa “from zain you can send money to Safaricom, it costs the sender 10 shillings, but the recipient pays 30 shilling to withdraw cash and it works well”

Other Uses
- harambee (fundraisers) where more money is sometimes raised by m-pesa than from cash collections at the event. This is also safer and money goes direct to the intended recipients
- Televangelists: every Sunday morning religious show on TV will have a prominent display of mpesa and zap numbers for viewers to send in cash for prayers
- Others are dowry payments, bar bill payments, petrol payments at fuel stations

Monday, July 27, 2009

Reading the Tea Leaves at Safaricom

Safaricom have published their >) annual report (download here). In a cost-cutting measure they will not be printing or mailing out these reports to their 829,000 reporters, nor will they serve any refreshments or give gifts at their annual general meeting in August 2009.


image from sambazanow


A to Z excerpts from the report

Performance Company had Revenue of 70.4b ($915 million) and a pre tax profit of 15.3billion ($198 million). Income was 59 billion from voice, 8 billion from data & SMS, but compared to 2008, growth is 8% and 80% respectively

M-Pesa - earned almost 3 billion from the money transfer system
- Vodafone hopes to take their money transfer model to other countries, though it has not fared well in Tanzania. Safaricom also hope to extend into international transfers from the UK via Western Union: it’s in test now (and hopefully will be cheaper than the current WU rates from UK to Africa )
- also plan to extend it to bulk payments (e.g. low end salaries in large organizations)
- agents now recruiting sub-agents

Directors - In September 2008, CEO Michael Joseph (US citizen?) joined the board, while Information Permanent Secretary Bitange Ndemo left the board. Kenya Government still has the Treasury and Privatization heads on the board.
- Susan mudhune joined the board and was rumoured to be the next chairperson to replace 70+ Nicholas nganga
- Both Michael Joseph and Les Baile have 2.35 million shares , chairman has 850,000, and privatization secretary Esther koimett has 637,000

Education working with JKUAT and Moi University on curriculum to get the graduates with the rights skills in telecommunications to join the company

Investment the company bought 51% of One communication limited a wimax service provider. One owns Comtec training & management (has local loop license) , Comtec Integration (has Digital carrier, network operation license) , and Flexible Bandwidth Services (has ISP license). One was technically insolvent. It had net liabilities of -66 million, but Safaricom paid 186 million for a stake in it after estimating it had goodwill of 219 million .

Licenses Safaricom has 5 licenses with a span of 15 years international operator license (1999), international gateway (2006) and 3G (2007). also acquired two more by buying into one communications – local loop operator, and date carrier network operation

Liquidity: Safaricom has trade payables of 11.9 billion, receivables of 4.3 billion, and cash of 4.3 billion . Their financial statements notes that current liabilities (35.3 billion) exceed current assets (17.3 billion) by 18.2 billion ($236 million), but that the company generates sufficient cash (about 30 billion) to meet operations; also that a significant portion of creditors relate to network expansion costs and this is expected to continue as long is period of intense network expansion, and they will borrow is there is s shortfall should auditors have emphasized this?

Media Crunch? Sales & advertising was 2.28 billon ($30 million), basically unchanged from the year before, and this was despite facing and expensive marketing campaign from rival Zain

Shareholders - Pension giants – national social security funds of Uganda ( 160 million shares) and Rwanda (96 million shares) are in the top 10 shareholders but Kenya’s NSSF is missing
- Has 465,000 shareholders who own less than 1,000 and while another 300,00 own less than 10,000 shares. The former will be getting dividend payments of 100 shillings($1.30), which makes the toll free payment y dividend a very smart option to apply for.
- No mention of mobitelea in report who recently exited from the shareholder register.

Submarine/Fibre Safaricom is a shareholders in Teams fibre optic cable system , it has committed 1.6 billion shillings ($21 million) , which it estimates will reduce cost of communication by up (Only) to 33% over 5 years

Tax Break Will pay 27% income tax for 3 years from march 2010 , instead do 30% since they listed. other Kenyan companies pay 30%

Wednesday, June 17, 2009

Urban Inflation Index – June 2009

Tracking changes in the three months since the March 09 index and to approximately a year ago with the July 08 index

It’s going to be a tough year given the financial results that we have seen so far. Safaricom had reduced profits, while Zain and surprisingly Kenya Airways also recorded losses for the financial year. And while most banks have growth of 30 – 40%, GTV went bust.

The arrival of the submarines/fibre cable are expected to bring down the cost of communications sometime in the future, but at the same time it is expected that the Kshs. 109 billion ($1.4 billion) to be raised from local financial markets in the next few months to finance the services, programs, and deficit of the Government of Kenya will in the process also push up interest and borrowing costs for individual and businesses.

Gotten cheaper

Fuel: A Litre of Petrol fuel (at local petrol station) is now Kshs 72.5 (~$4.18 gallon) down 3% from 75 in March 2009. A year ago, petrol was retailing at over 100 shillings per litre.

Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 92, down from 96 in March. However this is still much higher than the Kshs. 73 a year ago and a high food prices remain a sore point for many consumers – both urban and rural.

Communications: While phone calls through leading mobile company Safaricom are largely unchanged at about 8 shillings per minute (~$0.10), calls are cheaper at Orange and Zain, but probably from subsidizing consumers to lure them away from Safaricom. What has gotten cheaper is the cost of data. A Safaricom modem now costs Kshs. 4,000 ($51) and has been dropping periodically since it was introduced in 2007. Safaricom has also several ongoing promotions for laptops, blackberry’s and data-enabled phones as it competes with the likes of Access Kenya, Orange who sell the I-Phone, and Zuku from Wananchi who last month slashed in ½ the price of unlimited broadband.

Foreign Exchange: 1 US$ equals Kshs. 77.94 having appreciated from 80.07 three months ago. It was 67.4 a year ago, but few expect it to edge downwards for the next few months.

Unchanged

Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 130 ($1.60) unchanged from three months ago, and also priced the same as last July. While prices have not changed, beer sales may on shifting sands. Former Trade Minister and member of parliament Mukhisa Kituyi was interviewed a few weeks ago on TV and he made some remarks on how the economy is impacting the mwananchi (ordinary man) – he said before someone would go and watch a soccer match on TV in a sports pub and have 4 beers, today that same person will nurse a single beer for the duration of the match (was he talking about himself?)

More Expensive

Electricity: my bill last month is Kshs. 2,100 ($27) up from 1,800 three months ago (comprising fuel cost of 436c/kwh, and forex adjustment of 63c/kwh – it was lower 649c/kwh last July). The expectation is that with drying rivers and water dams, electricity generation and consumptions costs (Kenya is still hydro or diesel fuel dependent) will become more expensive. In his Budget Speech last week, Kenya’s Finance minister proposed to remove taxes on generators and other power production equipment, perhaps in anticipation that more companies may be buying these soon. Already, blackouts (announced and unannounced) are becoming more common either from transmission failure or vandalism (some brave people steal wires or fuel from transformers!)

Of concern also is the quality of electricity supplied. In the last week, my microwave and kettle have been knocked out, while a neighbour lost both water heating boilers in her house. The inconsistent electricity supply also knocked out my TV a few months ago and I’m scared of charging my laptop except late at night when i expect supply to be stable!

Other food item: Sugar (2 kg. Mumias pack) is Kshs. 175, up from 165 three months ago, and a year ago it was 145 (now costs 21% more than a year ago).

Friday, June 12, 2009

Mobile phones lower the cost of business

Money Transfer Within Kenya Part 3

A comment from @alykhansatchu on Money transfer lead to an update of the first post about money transfer from about 3 ½ years ago before the advent of mobile money transfers.

At that time, the cost of sending 10,000 shillings (then about $136) within Kenya was Kshs. 1,700 ($23) with Western Union and 1,850 ($25) with Moneygram - working out to a remittance cost of about 17% - 19% for an instant money transfer. This was mostly done at a few commercial bank branches, some foreign exchange bureaus, and at post offices around the country within banking hours.

90% savings: A lot has happened in the last few years mainly in the form of the arrival of money transfers via mobile phones by MPesa from Safaricom and more recently Zap from Zain.

A recent post last week noted that Western Union in Kenya have just lowered transfer costs to flat rates of 2% i.e. almost 88% cheaper than what they were at the time.

In the last few years, millions of Kenyans have moved on to mobile phones for money transfer and I can’t recall anyone who uses banks for these transactions. Mobile phone have maximums of about $430 (35,000 shillings) for money transfers, but this is more than enough to cater for most remittances, including the emergencies that necessitate instant transfers.

And mobiles are still cheaper; the 2% western union charge to transfer 10,000 shillings works out to about 200 shillings. A transfer of the same amount by Zap costs 75 shillings (0.75%) and 105 shillings (1.05%) by M-Pesa (after combining sender and receiver fees)

International remittance to get cheaper?: Zain hope to link Zap to allow transfers to customers of Zain in different African countries. And Safaricom are setting up a link for transfers from the United Kingdom to Kenya. When these are established, we should also see the cost of internal remittances, whose sometime high cost is a cause for complaint for many Africans in the Diaspora, also drop significantly.

Wednesday, June 10, 2009

Delta, Zain and KQ Tweet Around

and other Bank Twits
Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of the last few days on Twitter:

May 29
- @MauriYambo Kenya Co-op Bank directors shareholding Stinks http://bit.ly/EvI2d
- KTN’s Larry…. Madowo @larrymadowo on Twitter
- After a few drinks I discover I may be related to @kafai and @gishungwa! #TIA

May 30
- Morning traffic jams in Nairobi Kileleshwa. Spy some Apts being built into the river & fear that one day, river will rise & reclaim its banks
- Government of Kenya shot itself in foot with punitive alcohol tax. Spirit brewers going belly up, Uhuru should correct

May 31
- Happy birthday young @intelligensia

Jun 1
- @mwaikibaki will launch Kenya’s fibre optic cable this month
- @mwaikibaki says Kenya census starts august 24. Ends with his famous phrase, calls hecklers #pumbavu
- Cadbury seems to have discontinued my fave choc wafer, while alvaro is on sale - buy 5, get 1 free!

June 2
- Some Nairobi buildings were designed by Mario bros - with secret floors, VIP lifts, hidden entrances, hostile guards to negotiate
- Santander Bank may sponsor Ferrari next year - does that also make Alonso their new driver? http://tinyurl.com/mgukmu
- Does patient capitalist Jacqueline Novogratz @jnovogratz have the answer to the role of aid in development? http://tinyurl.com/q9llxb
- The African Union wants to set up an African Central Bank http://bit.ly/QcMav
- @TerryanneC Delta Airlines maiden flight earlier scheduled for tomorrow from Atlanta to Kenya postponed indefinitely
- If I had to subscribe to one magazine for life, it would be the Economist

June 3
- @coldtusker -even without airport CEO, artur, 1jet1 - US may want more than one airport checkpoint to filter passengers, so non-stop no go
- @mamboleo ranneberger welcomed delta in the news and was to officiate today. Mwakwere has been in US for a week waiting to fly
- @MIMImagazine new Sade album this year http://bit.ly/Ywv14
- What's wrong with Kenya airport Security? http://tinyurl.com/qmmem2
- Want to speak like Kenyan kids? - try the Sheng dictionary http://www.sheng.co.ke/kamu...
- Got an accurate shares statement by e-mail from CDSC Kenya - so my stockbroker is still honest

June 4
- Should companies care about what’s written about them online? http://bit.ly/oiYFw
- Former ministers and MP's mentioned in parliament as masterminds of some collapsed Kenya pyramid
- Michuki and Ruto top a NTV viewer poll of best performing ministers in Kenya. Ok... #Kenya

June 5
- @alykhansatchu "In September 2008, all hell broke loose, it fell like the Titanic" - Titus Naikuni Kenya Airways CEO
- @coldtusker Kenya Airways losing 4 billion after Zain's 7 billion loss, there's a lot of blood!

June 6
- Nairobi city council asking 100 shillings ($1.25) to photocopy each 100 words of new laws that will punish residents #FAIL
- Follow George Ayittey @ayittey for a harsh dose of Afro-reality
- JKIA arrival lounge - musician Jua Cali and Uganda leader Kizza Besige arrive unnoticed

June 7
- Button-Brawn wins turkey GP. Kenyan crowds are ABB - Anyone but Button
- @karuoro does XYZ fail for taking shots at politicos who are too funny to be imitated or is it the poor voices?

June 8
- Reading Africa confidential to see which way Gabon goes: Lady Senate president should succeed, but Bongo Jnr. is minister of defence
- Weekendgossip: Delta planned Nairobi route before they mergered with Northwest - who are KLM partners. KLM have invested for many years in Kenya Airways so does it make sense for Delta to fly to Nairobi?

June 9
- Why would Wanjiku Mugane quit the EABL Board? http://bit.ly/u6a6V
- R/T @kainvestor @kachwanya Zain looks to close $12bn deal to sell Africa unit - report: http://tinyurl.com/m4wofy
- Soldiers are not allowed with guns in the room (and other hotel rules) http://bit.ly/BCAV8
- Time to do the tax return thing - 3 out of 4 years waiting for a tax refund

June 10
- How the Lakers won Game 2: I wish Bill Simmons watched Soccer and F1 because there are more conspiracies than NBA http://tinyurl.com/ma2gax
- The folks at DNA Kenya have published a Promiscuity Index Report: Ave No. of Steady Mistresses! Ave No. of kids per steady Mistress! Ave No. of 1 night stands since wedding! #DNAKenya http://www.dnakenya.com
spot the difference

Wednesday, May 13, 2009

Centum seeks Carbacid

and other Bank Twits

Twitter is a micro-blogging tool that is relly nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter:

- @louizah Zain Vuka has ended? Please confirm
- @NTV showing IFC-funded docu on women entreprenurs - meaning manu-arsenal will be on tape delay - WHY? next @NTV ditched a static-filled channel & skipped their 'half time' piece to present second half live, on a much clearer signal! Kudos
- Sports journo era over? Player asks for trade on blog team obliges on Twitter player thanks fans on Facebook http://tinyurl.com/d967eu
- blog post Why Safaricom should spin off MPesa http://bit.ly/gYZ86
- The Central Bank of Kenya reports have become incomprehensible B.S
- Upgraded Safaricom Investor relations page has media and CEO briefings http://bit.ly/VBZ2f
- Tanzania will now recognize Kenya manufacturers mark of quality http://bit.ly/USZHg
- Delta Air round-trip intro fares from Nairobi include (ex-tax) $650-NY/DC, $975-ATL/Chi/ Dallas, $1124-LA/SF and $1440-Detroit
- @kahenya @jamesmurua likes Riviera, which has good crowd and facilities, but beer is pricey and the place is a fire-trap
- So Joe Biden met Nairobi mayor Majiwa in chicago. There, thats the end of the joke
- Safaricom CEO says M-Pesa not yet profitable http://bit.ly/TDV8D
- @leofaya says Kenyan promoters are killing Facebook http://bit.ly/zBHXB
- Today's pavement uprooting is sponsored by access kenya - as the fibre optic railway is laid around Nairobi
- @Archermishale sports conspiracy goes that where a sport wants to sway a big game, they put in a low-quality ref, but didn't happen on Wednesday
- Safaricom partners with Kenyas' largest bank KCB http://bit.ly/J4l92
- Kenya budget saga ($115 million) blamed on a typo - Quote ODB "N___ please!" http://tinyurl.com/p5hoyo
- blog post: two bank shareholder meetings same day same building same time http://bit.ly/86lNq
- @pinkm so you can only use debit, but not credit card to buy amazon books from KE? Interesting
- Ethiopian Air applies to fly from Nairobi to Amsterdam and Nairobi –Liege (Belgiu
- Land spin: Could there be a link between migingo island and the kampala land kenya got from Uganda military?
- If MTN buy Yu or Access Kenya, they will have to negotiate with MTN matatu society for use of name
- blog post Its Our Turn to Eat (is credit card worthy) http://bit.ly/YnriQ
- NMG 2008 report gives prominent mention of new digital division, Making-Nation DVD and Zuqka portal http://tinyurl.com/qkcphc
- Centum applies to the CMA to buy Kshs.350m of Carbacid shares and be largest shareholder of the Nairobi listed (but suspended) company
- Senator cards advise customers to only upload to https, not http sites. It's rare to find credit company giving card advice
- From Mars Group: Parliament's Report on the Kenya Budget inconsistencies http://blog.marsgroupkenya....

Tuesday, March 17, 2009

Zain in Kenya

Vuka Verdict:


Zain introduced the Vuka revolutionary flat rate call package of 8 shilling per ($0.10) minute to call all other networks in October 2008. After an initial surge in customers. What do the numbers bear out?

Rough dialing

- Zain gained a million customers 3.08 million (up from 2.1 million)
- Zain lost revenue $162 million (~13 billion) down from $194 million
- Zain lost big money: Net loss was $90 million in 2008 compared to a loss of $21 million in 2006. the ~Kshs. 7.2 billion is perhaps the largest corporate loss in Kenya for a single year

Zain outlook

- The 2009 numbers should be much better as marketing costs of Zain’s Vuka were quite heavy for the last quarter of 2008 and by which time customer numbers were still growing. But with just 5% of the entire Zain group customers, Kenya may be an expensive group to manage in what they consider to be a competitive market with low revenues [Average revenue per user/ARPU was $6 (down from $7)]. Zain claims 18% market share to Safaricom’s 77% and 5% for Orange
- Zain owned 80% of the Kenyan operation, up from 70% in 2007
- If Zain can state the population of Kenya is 38.5 million (up from 37.5 in 2007), is there need for an expensive Government census which will take place later this year?

Tuesday, March 03, 2009

Urban Inflation Index: March 2009

Changes in the three months ago since my last review in December 2008 and also compared to February 2008, which was just over a year ago.

In 2009, oil prices and maize prices have become the national talk as scandals, shortages, and price hikes have plague these industries causing grave concern that the country could be destabilized.

With maize, a shortage of maize flour on supermarkets coupled with shady deals were highlighted in the media all leading to a motion of no confidence in Parliament against the Agriculture Minister in February 2009. it was shot down

In oil/petrol, the collapse of Triton petrol, a small politically-connected oil marketer had ripples across the industry. The firm appears to have made a big gamble and purchased and stored excessive stocks in the expectation that oil prices would remain high, but when they dropped, the firm imploded and the chief executive fled to India. It has become a monster scandal with staff losing their jobs, banks suing the government (through the oil storage and pipeline companies) and calls for another no confidence vote in Parliament, this time against the Energy Minister.

changes in the last three months

Gotten cheaper

Fuel: A Litre of petrol fuel (at local petrol station) is now Kshs. 75 (~$4.2 per gallon) which is about 20% cheaper than it was 92.7 in December 2008. Shell Petroleum led the price drop, forcing other oil marketers to follow suit and probably did in Triton with their price cut in December 2008. Petrol was Kshs. 88 a year ago

Unchanged

Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 96, compared to Kshs. 97 in December 2008. However it cost just Kshs. 52 a year ago

Communications: Despite the presence of two additional phone companies, the mobile price war has cooled and calls cost about Kshs. 8 (~$0.10) per minute. With Zain, the price applies across all networks, but for Safaricom it's within their network only. New companies are offering gimmicks like Yu's Kshs. 0.50 per minute (after making calls for two minuets at Kshs.7.50). However other prices, notably in data and equipment (handset prices) have dropped. Safaricom modem’s cost less than ½ their introduction price, and features like Picture messaging (SMS) now costs Kshs 3.50 ($0.04) (it was introduced at 20) a year ago Safaricom calls were also about 8 shillings per minute

More Expensive

Electricity: my bill last month is Kshs 1,800 - slightly less than the bill a year ago. However by looking at the components that make up the bill - fixed charge is Kshs. 240 (was 175 a year ago), fuel cost adjustment is 427c per kwh (was 199c a year ago), forex adjustment was 63c per kwh (was 31c per kwh) - all causing my bill to cost about 70% higher than my approximate consumption a year ago. This is also a sore point with Kenyan manufacturers and industries who have complained (PDF) about the high tariffs even as Kenya power & lighting company announced improved profits for 2008.

Foreign Exchange: 1 US$ equals Kshs. 80.07, it was 79.08 in December 2008. Remittances to Kenya which have dropped every month since October 2008, are partly to blame. US$1 was 70.7 shillings a year ago

Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 130 ($1.60) up from Kshs. 120 in December 2008. East African Breweries, Kenya's leading brewer, has complained about high input costs and new taxation, and for once their share price is almost as cheap as the recommended retail price of their main seller - a bottle of Tusker beer was 120 a year ago

Other food item: Sugar (2 kg. Mumias pack) is at 165, it was Kshs. 160 last December. 150 a year ago

EDIT: Also, more expensive is Housing - the rent was hiked 40% in January 2009; however that’s still about ½ what I’d be comfortable paying for a mortgage in the neighborhood.

LinkWithin

Related Posts with Thumbnails