[kictanet] FW: Safaricom's Super Profits

Sat May 18 19:13:55 EAT 2013

Listers,

See response below from Dr Alison Gilwald who has been leading the studies I referred to in multiple African countries (about 25 countries)  - I think we are onto something interesting here in trying to unearth what is going on in the Kenyan telecom market.

See her email below. I'm glad that a lot of the people we know and are members of the list are involved in these comparative studies.

Walu/Grace, I think we need a structured debate once the team has released the Kenyan study and policy brief (I hope they will have a face2face meeting in Kenya too). We need to have this debate and the new Cabinet Secretary clearly has his job cut out! We need to address this market imperfection that keeps consumer prices too high!

Edith

From: Alison Gillwald [mailto:agillwald at researchictafrica.net]
Sent: May 18, 2013 6:55 PM
To: Edith Adera
Cc: alice at apc.org Munyua; Margaret Nyambura; Prof. T. Mwololo Waema; Christoph Stork; Enrico Calandro
Subject: Re: [kictanet] Safaricom's Super Profits

Dear Edith

You are absolutely right. The dominance of Safaricom (biggest market share of any competitive market in Africa I'm sure) and its ability to leverage for its mobile money services,  allows it to extract these near-monopoly rents.  Though our research does demonstrate  the positive effects of mobile termination rate reductions in Kenya which have allowed smaller players to put pressure  on it.  We were putting together a policy brief on pre-paid mobile and broadband pricing (which we are finding increasingly need to be examined in relation to each other) with Alice Munyua and Margaret Nyambura in Cape Town last week at our research workshop, but it was not finalised before they  left. Will follow up with them and Tim (we were expanding the pricing section in the Kenyan country report with Nyambura - and thought we could launch the report with the pricing policy brief), but perhaps we should fast track that.

As more people move onto data services and the Internet, quality of service becomes a much greater issue. QoS is really the flip side of pricing. We are doing a pilot test in SA which is showing that no operators are delivering what they advertise and customers are paying for. We are hoping to roll this out to five more countries  and are liaising with Michuki Mwangi at internet Society on this. Will keep you posted.
Warm regards
Alison
Alison Gillwald (PhD) l Executive Director: Research ICT Africa l 409 The Studios, Old Castle Brewery, 6 Beach Road, Woodstock, Cape Town 7925l l Tel: +27 21 4476332 Fax: +27 21 4479529  l  Box 228, Green Point 8051 l
Adjunct Professor UCT Graduate School of Business, Management of Infrastructure Reform and Regulation.

See www.researchICTafrica.net<http://www.researchICTafrica.net/> for details on latest publications

On 18 May 2013, at 11:35 AM, Edith Adera <eadera at idrc.ca<mailto:eadera at idrc.ca>> wrote:

Barrack and Ngethe,

I think otherwise.

The super-profits seem to arise NOT from "real productivity gains" or "reward from entrepreneurship" but from monopolizing access to the market (e.g. mpesa has tied people to Safaricom; consumer behavior of not shifting despite number portability or  poor quality of service as Barrack points out or high price of service or the availability of other money transfer options - etc etc etc). Here is where the "PECULIAR" behavior of Kenyans needs to be unearthed - We need to "peel off the mask" if I can borrow those words.

So this has created some ARTIFICIAL "exclusivity" of Safaricom products creating monopolistic or oligopolistic tendencies in the Kenyan telecom market.

So you cannot entirely blame Safaricom for this state of affairs, we need to get to the "kernel" of the issue to understanding why the Kenyan market seems to be so unique and consumer prices are just not coming down!! (maybe Kenya is not alone?)

I would really like to hear from Research ICT Africa who have been carrying out consistent research studies (for the last 10 years or more) comparatively examining over 22 telecom markets in Africa (including Kenya) under the title "Telecommunication Sector Performance Reviews" (http://www.researchictafrica.net/publications.php) - our own Prof. Waema, Muriuki Mureithi, Dr Adeya have been leading the Kenyan studies. I have also copied Christorph Stork and Alison Gilwald, why Kenya is different?

Would also be great to hear from Matano (CCK)?

Edith

-----Original Message-----
From: ngethe.kariuki2007 at yahoo.co.uk<mailto:ngethe.kariuki2007 at yahoo.co.uk> [mailto:ngethe.kariuki2007 at yahoo.co.uk<http://yahoo.co.uk>]
Sent: May 18, 2013 11:48 AM
To: Edith Adera; kictanet
Cc: KICTAnet - Media Editors Forum; KICTAnet ICT Policy Discussions
Subject: Re: [kictanet] Safaricom's Super Profits

Edith,Listers,
Interesting questions raised.The results are not entirely unexpected and that is why,inter alia, CCK and Competition Authority were established.

John Kariuki
Sent from my BlackBerry(r)

-----Original Message-----
From: Edith Adera <eadera at idrc.ca<mailto:eadera at idrc.ca>>
Sender: "kictanet"
<kictanet-bounces+ngethe.kariuki2007=yahoo.co.uk at lists.kictanet.or.ke<mailto:kictanet-bounces+ngethe.kariuki2007=yahoo.co.uk at lists.kictanet.or.ke>>
Date: Sat, 18 May 2013 08:38:42
To: <ngethe.kariuki2007 at yahoo.co.uk<mailto:ngethe.kariuki2007 at yahoo.co.uk>>
Cc: KICTAnet - Media Editors Forum<mediaeditors at lists.kictanet.or.ke<mailto:mediaeditors at lists.kictanet.or.ke>>; KICTAnet ICT Policy Discussions<kictanet at lists.kictanet.or.ke<mailto:kictanet at lists.kictanet.or.ke>>
Subject: [kictanet] Safaricom's Super Profits

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