Idea Exchange: AppStars, Crowdsourcing, Maker Faire, Manuscripts

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The winners of the 2012 Africa Awards will be announced in October 2012, in Accra, Ghana. 

Also read about the young winners of the Anzisha Prize for young African entrepreneurs between the ages of 16 to 22.

Crowdsourced Journalism Awards for Africa deadline has passed, but it will be interesting to see the outcome of the big picture journalism contest  that had a prize grant a 15,000 Euros to be shared by three winners. The project is backed by Internews Europe and funded by the International Press Institute and - ..the goal is to strengthen African journalists’ capacities through training in the use of crowdsourced journalism techniques which aim to leverage citizen participation and increase the representation of local voices and perspectives through both traditional and new media channels.

Forbes Africa Ad Awards deadline is 14 September.

 

Google  RISE (Roots in Science and Engineering) Awards are now open. They promote and support education initiatives in two key areas: Science, Technology, Engineering, Mathematics (STEM) and Computer Science (CS) and will award grants of $5,000 - $25,000 to organizations working with primary and secondary school students in these fields around the world.

Deadline is September 30.

#Kenya365 Instagram Project collects interesting photos on daily life in Kenya. Simply tag your instagram shots from Kenya with #kenya365 and it ends on August 31, 2013.

 The Kenya Film Festival is a celebration of film in Kenya and the deadline for entries to the seventh edition of the festival is September 17.

 The Kwani? Manuscript Project is a literary prize for African writing and they are seeking unpublished fiction manuscripts from African writers across the continent and in the Diaspora. The top 3 manuscripts will be awarded cash prizes of Kshs 300,000 (~$3,500) for 1st place, and Kshs 150,000 and  Kshs 75,000 for 2nd and 3rd place. Kwani? will also publish the manuscripts and market the authors globally. Deadline is 17 September. 

Kwani? also has a Majuu offer to Kenya's who live or have been in the diaspora (huko Majuu) and will pay people for photos, party flyers, job applications, tickets, recipes and other mementos of their time in the diaspora. Deadline is September 23

Make Faire Africa apply now to exhibit creative inventions, designs & fabrications at the 2012 edition in Lagos in November.

ONE The 2012 ONE Africa Award has a $100,000 prize that rewards innovation and initiatives in line with the millennium development goals. Deadline is September 23.

Orange African Social Venture is aimed at young entrepreneurs and start-ups across Africa that promote social development through ICT. Three winners will receive prizes of between 10,000 and 25,000 euros and the deadline for applications is September 30 

Safaricom, in conjunction with Vodafone, has the Safaricom Appstar challenge with a grand prize for Kenya of  Kshs 1,000,000 (~$11,800) , and a runner up prize of Kshs 500,000, and will also reward one winner from each of the six categories of games & entertainment, agriculture, health, education, utilities and financial inclusion with a Kshs 100,000 prize. The winner and runner up will also travel to South Africa to take part in the Vodafone round of the challenge, competing against winners from Tanzania, Qatar, Egypt, South Africa, and Lesotho.

The deadline is November 2, and during that time people will be able to build new apps whether in Java, Symbian, Blackberry, or Android, but apps that already appear in other stores are not eligible. Safaricom will also be launching an app store in Kenya next month in developers will own the intellectual property to their apps and there will be a revenue sharing model that favours the developers.

EDIT

Apply for the Amazon Web Services start up challenge in categories of big data & high performance computing, gaming, consumer, and business - with grand prizes of $50,000. Deadline is November 9. 

Green Card:  The US DV-2014 (diversity visa) Program runs from October 2, to November 3, 2012.
 

The 2013  Innovation Prize for Africa - has three prizes totaling $150,000 for African innovations in any of  these categories - Agriculture/agribusiness, 2 Environment/Energy/Water, Health/Wellbeing, ICT and Manufacturing/Service industries. The first prize is $100,000 and $25,000 for the second with an additional special prize for a social impact innovation of $25,000.  Entries close on 31 October 2012.

Schwab Foundation Social Entrepreneur of the Year 2013. Deadline is 31 October. 

SOMA Kenya Nominations are open for the Kenya Social Media Awards.    

TED Global 2013 is now accepting applications.

The Unreasonable Institute is now accepting applications for the year 2013 and they seeking world-changing entrepreneurs - for who they will help scale their impact through mentorship, funding, and networking opportunities.

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)

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%?

Orange Kenya Outlook

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

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

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

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

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

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

Kutwa Friday: Everything Must Go

It’s been a while since the last Kutwa post. Here’s a rundown of things, most from the daily papers and various sites that have piled up

Banking: Co-Operative bank are deep into the marketing program for their October 20 listing at the Nairobi Stock Exchange. They may also venture into mortgage finance
- Barclays and Standard Chartered will both offer mobile messaging services to their customers
- Rand Merchant Bank (SA) plans to expand to Kenya
- Salary cards are coming to Kenya as FNDS3000 Corp which launched its payroll card program in South Africa and will follow into Nigeria, Kenya, Tanzania, United Arab Emirates and Qatar

What's in a Name?
a step forward: Telkom Kenya is now Orange: more on their new site and products

will they have orange phone booths?
- Nyanza petroleum dealers is now called Auto Xpress
- Chloride exide is now Chloride Solar
- The naming rights for Nyayo national stadium are up for sale to a corporate bidder (will it be Safaricom or Zain Stadium?)
a step back
- A new name is recommended for the discredited electoral commission of Kenya
- Grand Regency is now Grand Laicos Hotel?!

Developments: A new 21 storey 5-star hotel in Nairobi to be situated next to Barclays plaza (and is a stones throw away from the former Grand Regency)
- Kenya anti corruption to build a new headquarters
- Two battery recycling factories will be set-up; one in Changamwe and one in Konza
- Ethacom international will set up an ethanol production plant in in Bungoma
- Nairobi City council is seeking 50 acres for a new cemetery

Airlines: There’s little reporting about a pending strike of Kenya Airways engineers; however K24 TV reported that this may affect plans of President Kibaki to fly to London next week as engineers were going slow on maintenance of his planned aircraft and also other repairs after another little reported aircraft incident.
[image: KQ 777]
Energy: Following last months electric shock it was pleasant to see my electricity bill drop from 2,600 to 1,800 shillings ($26). No thanks to KPLC though, as the savings came largely from taking cold showers that reduced consumption from 161 to 115 units . Meanwhile there was another increase in KPLC fuel cost from 769c/kwh to 778c/kwh this month.

popular item in supermarkets
- Why doesn’t the government owned National Oil Corp (NOCK) who are supposed to check against check the high petrol prices charged by oil marketers sell petrol at the Kshs. 100 per litre (~$6.4/gallon) price that Energy Ministry says is correct?

- An S-class with the fuel economy of a Toyota? Pity Merc drivers are not concerned about fuel economy

ICT: The Kenya government plans to set up an official blog by September this year to facilitate better communication between the government and the public. "The blog will allow the government to respond to everyday issues being raised by the citizens," PS Bitange Ndemo told journalists in Nairobi. "More and more people are turning to the internet to read, write or say whatever they want to say and if such forums were properly utilized, especially during the election period, we would not have experienced the kind of problems we had in the country at the beginning of the year." hat tip Xinhua News - China
- Also the Kenya Government will set up a $39 million venture capital fund
- Telkom /Orange makes peace with Safaricom
- Controversy about an outsourcing scholarship
- Outsourcing #1: Pioneer BPO Kencall will manage call center for Telkom/Orange
- Outsourcing #2: site stats here show that Mauritius (9%) has overtaken the UK (8%) to be the third highest source of traffic to bankelele – after Kenya (45%) and the US (17%) - but, upon closer scrutiny for true fans there, it turns out the readers actually Kenyan-based - but routed through Mauritius.

Opportunities: The Skunk Awards 2008 is your chance to recognize and reward the leaders in the various ICT fields in Kenya. Chosen by YOU, the real stakeholders in the Industry. Vote for ICT Company of The Year, Best ISP, Most Innovative ICT product, Best Local Website, Best Local eCommerce Website, Worst Local Website, Best Local WebHost, Most Open Sourced (is that a verb) Organization, Best Customer/User Support, Worst Customer/User Support, Best Training Institute, Most Promising ICT Startup, Best Paying Company, ICT Entrepreneur of the Year, Best Local Application, Most Transparent ICT Tendering Govt Branch, Most Successful Government ICT project, and Worst Government ICT project. Send in your nominations to skunkawards@gmail.com before Friday October 10th.
- Apply online to be an Acumen Fund Fellow 2009-2010. D/L is 20 October
- Take part in the Wildman Triathlon in Watamu on October 18.
- Zebrajobs is a cool new job site that has some interesting opportunities in this past of the world

Other jobs: You can’t compete with Kenya’s largest employer, the Government of Kenya. Soon available at the Governments Public Service site will be jobs including at the Ministry of finance principal accountants - 26 posts, chief accountants - 64 posts accountant II - 320 posts!; at the ministry of energy (director of renewable energy, senior deputy director of renewable energy (engineering) , senior deputy director of renewable energy (biomass) ) ; at the Ministry of immigration - immigration officer II - 200 posts; at the ministry of fisheries, chief fisheries officers – 142 posts, fisheries officers – 78 posts; and at the Ministry of medical services - Nursing officers III - 686 posts, clinical officers III – 548 posts, medical lab technologists – 124 posts and Pharmaceutical technologists III – 100 posts. The application process involves a mix of new and old technology – you can download the forms online but applications must be sent in by snail mail (post office) to the to the secretary PSC p o box 30095-00100 Nairobi by 13th October. Thereafter applicants can check the status of application by sending an SMS!

- Dyer & Blair: Database administrator, network specialist systems administrator. Apply through Manpower Associates by 26/9
- Econet wireless rolling out in Nairobi Mombasa Kisumu Eldoret (when?) is hiring head of field operations, field operations engineers, manager – RF optimization, RF Planning & optimization engineers, Manager base station sub systems, BSS engineers Regional managers – passive infrastructure . Apply to techrecruit@econet.co.ke by 29/9
- Equity Bank is hiring credit officers, and debt recovery officers
- Genghis capital: head of stockbroking, head or research securities dealers. Apply by 10/10 to the head of HR at 9959-00100 Nairobi
- Gulf African bank: Area sales manager, manager product development (housing) credit administration manager, head of audit - apply to recruitment@gulfafricanbank.com by 22/9
- HLB ashvir: audit seniors audit manager – apply to audit@hlbashvir.com by 20/9
- KCB branch managers, Business bankers- apply to recruitment@kcbco.ke by 28/9

Mostly Equity

Friday the 13th, and almost a year after Equity Bank listed on the NSE should have capped off a great week for Equity Bank – except for some MP’s in Parliament and anonymous letter circulating on the web. More on possible impact on share price and a great defense of the Equity’s significance to the country’s business and investment scene - but BDAfrica should probably mention that their CEO is an Equity director, in the same way CNN anchors mention their connection to Time Warner each time they report on the company.

more
- Equity is usually the first bank to announce quarterly results and we can expect more great numbers in the weeks ahead for June 2007.
- Alongside shareholder Britak, Equity will take up a 24.9% stake in Housing Finance. But the banking Act discourages banks owning shares in other banks (merging is ok, shareholding is not)
- Going international, Equity is poised to expand again, opening branches in Rwanda and Uganda
- Equity bank customers will also be able to access their funds at Nakumatt stores starting next week

More bank happenings

ABC joins the flat fee account race with a Kisima account (priced at 495 shillings)

Barclays has partnered with Nakumatt stores to launch a credit card. Barclays also has a branch on River Road I hear – a sight to see!

What can the Central Bank do about the strengthening shilling? With appreciating currencies, see what India did to help their exporters and Uganda did to curb currency speculators.

Consolidated bank has introduced solid loop product for businesses pursuing contracts/tenders/LPO’s

EADB has a line of credit from EXIM India to finance importation of eligible goods from India into Kenya, Uganda or Tanzania

Family finance aka Equity Blue opens a branch in Kapsabet

CDC opts out of the Housing Finance rights issueleaving the door open for Equity Bank and Britak

KCB now opens branches every Saturday from 9 to 12. The days of banks only opening on the first & last Saturday of the month is now history, with most now open every Saturday with longer hours, even on Sundays.

As the Telkom privatization kicks off, will several banks opt to get paid or sit back and convert their debt into Safaricom shares?

other economic developments
- Tata chemical (majority own of Magadi soda) plans to build another soda ash factory at Lake Natron, Tanzania- a move being opposed by conservation groups
- A new School of the Nations in Kitisuru
- Lake Naivasha resort and spa
- The government plans to set up a radioactive waste processing facility on Karen!
- The National social security fund plans to complete an 11 storey parking complex on Ngong road. It’s about time someone did something to ease the parking shortage esp. for upper hill workers

opportunities

Jobs - most from the daily papers this week

Chief financial officer at the Africa trade insurance agency . D/L is 22/7

Kenya capital markets authority: mangers [finance, corporate communication], assistant managers [financial analysis, enforcement,] officers [compliance (2), legal, surveillance, research] accountant, MIS systems analyst. Details at online and D/L is 25/7

Action research officer at decentralized financial services recruitment@kenyagatsby.org by

Join the East African development bank Young processionals program. Apply to
recruitment@eadb.org by 23/7

Business relationship manager at Equity bank. Apply to jobs@equitybank.co.ke by 20/7

First community bank: Financial controller, Managers (trade finance, internal audit, human resources, brand development, e-banking & cards, legal) Branch managers (Nairobi, Mombasa) Relationship managers (corporate banking), corporate credit analysts, retail credit analysts. Apply to fcb-vacancies@ahmedabdi.com by 25/7

HLB Ashvir: partners or senior managers. Apply to akassam@ashvir.com

Assistance credit manager at housing finance. Apply to human.recources@housing.co.ke by 20/7

Kencall: trainee managers, head of HR, transcribers (50) and other positions. Apply online.

Apply online for project planner at Kenya airways

Kenya ICT board: Marketing manager, financial management specialist, procurement specialists. Apply through Deloitte at esd@deloitte.co.ke by 27/7

Apply online for Financial analysts Kenya shares

Programme Manager for the Global Water Operators Partnership Alliance of UN-HABITAT . D/L is 4/8

General Manager at UUNET. Apply to jobs@biz-ideas.bix by 20/7

Independent financial adviser at Winton investments. Apply to jobs@winton-investment.com

CEO of the Youth enterprise development fund. Apply through Manpower associates by 25/7

aviation
- CMC aviation requires captains and first officers for dash 5 and dash 8
- Jetlink looking for captains and first officer for dc-9 aircraft

Drummond Investment Bank

Yes, the beleaguered stockbroker Francis Drummond is now Drummond Investment Bank as per the latest licensee list from the equally occupied Capital Markets Authority.

Other Notes
- Zimele has two new unit trusts – a balanced and a money market fund
- Suspended Francis Thuo is now missing from the list of stockbrokers, but so is Faida Securities. Is that an omission?
- Uchumi advisers Royal – who later became Amana, are missing as are B A fin. Mgmt and Interglobal who have officially been deregistered. Meanwhile Inter Alliance International are new investment adviser
- Equity Bank now joins the list of authorized depositories

Safaricom Valuation?
The government has valued the 9% of Safaricom shares pledged to banks who advanced a bridging finance loan to restructure Telkom Kenya at 5.835 billion - placing the whole company’s valuation at about 64.83 billion shillings ($926) million and second to EABL at about $1.4 billion)

Edit: Allowing for banks discounting the shares at 60 - 70% of nominal value, puts the value of the company at between 92 and 108 billion shillings.

Safaricom Success

Mr. Michael Joseph, the Safaricom CEO, gave a talk over the weekend on leadership and the successful transformation of the company from a moribund department of a dying parastatal (Telkom Kenya) to arguably Kenya’s most successful company. The Q&A session also brought out more candid answers particularly on challenges he and the company faced as well as the performance of its competitors. And since Safaricom is not (yet) a public company, this is perhaps the closest thing to an AGM of shareholders for the company until 2009.


Safaricom CEO, Michael Joseph

The Beginning
The Company started in 2000. Vodafone (40%) put in $20 million while Telkom (Government of Kenya) who were supposed to chip in with $30 million, didn’t put down any cash, giving only their dilapidated network infrastructure and 17,000 existing, and angry, customers. The company had 5 employees led by the CEO who had done a similar start-up in Hungary. However three days after the company launched its network collapsed, damaging its reputation for network quality.

Today
Safaricom’s revenue is comparable to East African Breweries and Kenya Airways. It is several times larger than its competitor, has 900 employees and 4.6 million subscribers (the company also envisions Kenya as having 16 million potential subscribers).It has invested 55 billion shillings, all internally generated, constructing its network, which now covers about 20% of the geography of the country.

Success factors
Safaricom made several key decisions early on, but was helped by the collapse of Telkom landlines and, in hindsight, some blunders by Kencell (now Celtel) which launched around the same time and which initially had a larger subscriber base in the early years. These include:

- Focus on prepaid customers The company felt that in a country without a strong credit background industry, consumers would only spend what they had. Also the CEO felt that they would need these mass-market subscribers to support corporate customers who were more lucrative. Today they have 90% of the corporate market, which Kencell set out to target initially.
- Billing per second for calls while Kencell billed per minute. Safaricom sacrificed about 20% to 40% revenue per call but again, it won more customers who preferred to only pay exactly for airtime they used. There was much debate about which method was superior, but ultimately Safaricom won out
- Having great customer service which was free and available 24 hours a day. While customer service is only paid lip service in Kenya he felt this would be important as consumers ventured into the new mobile phone industry. Meanwhile, Kencell’s customer service was available only during working hours and was not free. The CEO knows it is difficult to get through to customer service but that’s because the company gets an average of 25,000 calls a day sometimes double. Yet 95% of these calls are simple, how-to questions (e.g. send SMS, change tariff) everyday questions, answers to which are found in phone brochures.

Marketing
Even though the company is 40% UK owned, all their products and advertisements cultivate a Kenyan image utilizing the beauty of the Kenyan landscape and Swahili words (sambaza, bamba etc.) to reinforce how Kenyan the company is.



CEO was very dismissive of Celtel (a pan- African company) advertisements whose adverts have nothing Kenyan about them and faults their marketing strategy for assuming all Africans are homogeneous. Earlier, Kencell also introduced (French) Sagem phones to Kenya, which no one had heard of while Safaricom used Motorola and Siemens as their basic phone models.

Competition
Safaricom’s average revenue per user (ARPU) is 2 X Celtel’s and has not dropped in three years even as subscribers have more than doubled, leading the CEO to conclude that most Celtel customers are primarily Safaricom customers. Even though the company has network difficulty in some places e.g. industrial area, Safaricom has never shaken the impression, wrong he feels, that Celtel has a better network or clearer calls. He also says Celtel has a very high cost structure since they have ½ the revenue but only 1/10 of operating profit before finance charges.
- The CEO is not worried about competition from CDMA wireless as long as it is in the hands of Telkom Kenya which is still a bloated giant (17,000 employees servicing 240,000 customers)
- He is also not worried about 3rd or other mobile operators, or new service providers, but accepts that they will change the industry

Financing
The first time the company took on a loan, conditions were very stringent and the loan could have been recalled e.g. if cash flow dipped. But the second time they went borrowing (12 billion for network expansion) the company was so established, they were able to dictate terms to the banks. They borrowed at 1% above the T-bill rate while also retiring old debt. He also said Kencell (Celtel) had much higher finance charges since they had borrowed and were still paying back an expensive foreign currency loan from their then parent company (Vivendi.)

Other
Peculiar Kenyan call habits: CEO denies he ever made this infamous statement attributed to him. However he admiited he doesn’t understand why phone traffic between 8:00 p.m. & 8:40 p.m. on week nights is four times higher than normal, even though cheaper call rates are also available on weekends and at other times during the day.
Gift of gab: The most profitable call sites in Kenya are Garissa and Mandera. Safaricom has also set up call sites to meet high demand at remote refugee outposts such as Kakuma and Dadaab. Kenyans are also high users of text messages (next to Philippines) while Nairobi has the highest density of mobile calls in the day time (higher than New York) partly because landlines are poor.
Social responsibility: The company spends 200 million shillings a year on corporate social responsibility projects through its foundation and its biggest sponsorship will be the 2007 Mombasa cross country ($250,000).
Recruitment: Safaricom only employs graduates, yet somehow 70% of them fail a pre-employment test the company administers. They are now recruiting overseas and the average age of employees is 24 (seems young).
Premium rate services: CEO hates these companies who run promotions that charge 20 and 50 shillings above normal Safaricom rates. He has to let some of them use his network, by law, but makes it as expensive as possible for them to do so
Bad stats: When the company launched, it found that most of the government statistics on income, expenditure, and population were, and still are, wrong as shown by the number of subscribers the company has.
Honesty and integrity are the best virtues he has learnt to have on his job. This has enabled him to perform his job and shielded him from unreasonable requests/offers from politicians and business people and if there had even been a whiff of anything less, he would have been asked to compromise himself or the company.
Next CEO: He’s reluctant to retire even though he knows its inevitable. His last contract was renewed, after a long battle between forces from Central and Western Kenya who each wanted their own candidate, but were unable to agree, leaving him as the comprise candidate. He will prepare for retirement by stepping back as the face and spokesman of Safaricom slowly and we will soon see other senior managers at the company take on more public role in the future.

Future
- CEO wants the industry measure and focus to change from ARPU to ARPU margins
- Call costs will come down and there will be more price completion (perhaps even 5/= per call) as new competitors and technology become factors down. He expects Safaricom profits to drop from next year and may have to start cutting costs to stay competitive.
- Safaricom will have a new big product by year-end, which will change our lives. The company will also add a new tariff this year

Safaricom IPO
IPO was planned to happen this year, but the Cabinet rejected the proposal until Telkom is first privatised. The reason is that Safaricom is Telkom’s only valuable asset, and they did not wan to diminish Telkom’s IPO value and prospects. So the 25% sale will be in2008 and will be bigger than Kengen’s, by far, according to the CEO.

Telkom's Revenge?

Small piece in the Thursday Daily Nation about how Telkom Kenya will soon introduce CDMA mobile landline phones (made by Huawei of China) and these will work within 120km of one's Nairobi home - and enable calls to be made to other landlines at about 4/= per minute, well below mobile rates of 20/=. So instead of carryting two phones (one safaricom, one celtel), some pople will carry one mobile, one landline and use whichever is appropriate or convenient

From Balancing Act Africa (No. 252)

FOUR MORE NATIONAL OPERATORS JOIN EASSY PROJECT: BURUNDI, ZAMBIA AND LESOTHO

Tanzania Telecommunications Company Limited (TTCL) and three other national
operators from Burundi, Zambia and Lesotho will soon join the East African
Submarine Cable System (EASSy) project - bringing to 18 from 14 that signed earlier on. Together the operators will soon be required to raise USD100 million half of the amount of money required for the fiber optic cable on the east African coast. Other Telecom companies that signed under the project include Telecom Kenya. The 8,840 km undersea cable that will run from Djibouti to South Africa will cost over USD200 million, but its operation and maintenance will require funds that EASSy project officials say will be generated from voice and data traffic generated by telecom operators in the region.

KENYAN REGULATOR CCK SLAMS TELKOM OVER UNMET GOALS
Fixed line telecommunications service provider Telkom Kenya has failed to meet its licensing obligations, the sector regulator has said. In its latest annual report the Communications Commission of Kenya (CCK) says Telkom Kenya failed to translate its long time monopoly into increased number of fixed line connections over the past three years. Consequently, CCK says Telkom¹s failure will hamper efforts to encourage other players in the market to lower the cost of Internet and mobile phone use charges.

new licences
The Communication Commission of Kenya (CCK) has gazetted nine companies for various licences in the telecom sector. The latest issue of the Kenya Gazette Notice indicates that CCK has lined-up Comtec Intergration Systems and Lanbase Communications Limited for Internet Backbone and Gateway services operator's licence. Two other companies linked with Comtec and Lanbase have been gazetted for
three different licences. Comtec Training and Management Services has been lined up for a local loop operator's licence while Lanbase Communications is gunning for a leased circuit resale licence. Comtec has also applied for a Private Data Network Operator (PDNO) licence.Also gazetted are KTIG Consulting Limited and Africa Spinoff Limited for a Local loop operator's licence. Africa Spinoff Limited has also applied for a PDNO licence.Callkey (East Africa) Limited and EDP Limited have been lined up for an Internet Service Provider (ISP) licence while Scandinavia Express Kenya Limited is currently waiting for a regional courier operator's licence.

Restructure Telkom using Safaricom

(In an interview in the financial post (Feb. 14) Safaricom MD admits that he hopes that one day, Safaricom (Owned 60% by Kenya Govt/Telkom, 40% by Vodaphone) will go public and that Econet does not have much of a chance, especially if they have to build their own network. He also admits to some failures such as GPRS and a phone re-cycling project. Also, 98% of Safaricom’s customer base are pre-paid, and while he wishes to lower the cost of making calls, he points out that 26% of airtime goes to taxes.

The government should sell out of safaricom and use the cash to restructure Telkom and invest in other communication or development areas. Of Telkom’s 16 billion debts, a significant amount is owed to Safaricom and Kencell, and those can be re-negotiated. Telkom is losing out, as it can’t afford to compete in de-regulated markets as more competitors are licensed. There are investors willing to partner with Telkom but only after it undertakes a costly retrenchment and restructuring in which can be funded with cash from a safaricom public offering.

In 2002, Safaricom had revenue of 9 billion (753m profit), and in 2003 it was 14 billion (with 2 billion profit). According to Joseph, in first 6 months of 2004, the government received 1.2 billion in corporate income tax from Safaricom as well as 3.5 billion in duties and fees (on phone calls, SMS, new lines etc). Safaricom has paid over 25 billion in taxes to date and the government will continue to earn between 5 billion and 10 billion a year from safaricom in annual taxes even after privatisation.

The government is sitting on value and goodwill of its share of Safaricom and should use this opportunity to invite the public to also invest in the sector. Safaricom will probably be the most over-subscribed offering in the history of East Africa (surpassing Kenya Airways and Kenya Commercial Bank) and will enable the government to restructure Telkom Kenya.