[kictanet] Yu acquisition proposal to regulator

Tue Mar 4 14:39:26 EAT 2014

@Ali,

I think you are refusing to see  the efficacy of MPESA in the Safaricom ecosystem. Whereas Voice still contributes their largest profit percentages, this voice market is glued  together around the MPESA product.

Think Microsoft of the last decade.  Why was their applications so successful (MS-Word, MS-Excel, MS-Exchange, etc)?  Because they were build around their fairly universal and monopolistic Operating System (MS-Windows).  In todays world of tablets and Smartphones and CloudComputing,  the Operating system of choice has changed (from Microsoft to Android,  iOS and CloudServices i.e. TCP/IP).

Suddenly Microsoft finds itself exposed on their product lines (Word, Excel, etc) because they have lost the monopoly of the Operating System.  Same thing with Safcom.  You expose MPESA to real competition, you break their stronghold on the Voice and other data services.  That is what  I blogged about @http://tiny.cc/3o36bx (thnx GG for sharing :-)

Safaricom is clever (that is why they are no. 1)  and one can see from their recent industry moves that they are reacting appropriately.  What I dont know is if CCK can also their overall game plan and what it means for the industry. Sorry, let me rephrase that - I think CCK can also see the Safaricom game plan, but I am still not sure they have the "oomph" to intervene one way or the other.

At this point in time, the game has moved from being "technical", gone through being "economical" and we are now at the stage where the big boys(where are the girls :-() in politics are receiving calls from interested parties on which way the game should end. I dont have moles way up there but ladies and gentlemen this discussion (Yu acquisition) must now at a the Politcal layer.

You and I can only wait and see - and run to court if we feel aggrieved by the final decisions taken.

walu.
--------------------------------------------
On Tue, 3/4/14, Ali Hussein <ali at hussein.me.ke> wrote:

 Subject: Re: [kictanet] Yu acquisition proposal to regulator
 To: jwalu at yahoo.com
 Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
 Date: Tuesday, March 4, 2014, 1:42 PM

 Edith
 +1.
 Mark, sometimes regulatory action is used as a
 weapon when one has been unable to compete. My take is that
 Mpesa isn't yet the bread and butter of Safaricom. The
 greatest value it has is in its network effect. I suspect
 that Safaricom is already on the hunt for the next big
 thing. They are building out WiMAX networks, engaging
 businesses for computing needs etc. This boring stuff is
 where the money is.
 My take? CAK (CCK) needs to stand down on this
 one and let the market take its course. After all what else
 does the competition need to be done for them to compete
 with Safaricom? Share out subscribers through legislation? I
 think this isn't a perfect market but the regulator here
 is doing an ok job.. 

 Ali Hussein
 +254 0770
 906375 / 0713 601113
 "I fear the day technology will
 surpass human interaction. The world will have a generation
 of idiots".  ~ Albert Einstein
 Sent from my iPad
 On Mar 4, 2014, at 12:12 PM, Edith Adera <eadera at idrc.ca>
 wrote:

 Mark and
 Listers,

 If I were Safaricom, I would do exactly what they are
 doing and MORE! That is the nature of competition! 
 But if the consumer behaved differently.....aka
 "rational consumer behaviour"......would the
 competition hold? ....I dont think for long!

 Edith
 ________________________________________
 From: Mark Mwangi [mwangy at gmail.com]
 Sent: Tuesday, March 04, 2014 1:33 AM
 To: Edith Adera
 Cc: KICTAnet ICT Policy Discussions
 Subject: Re: [kictanet] Yu acquisition proposal to
 regulator

 @Edith the reason it doesn't work here is because
 of arrogance or incompetence by the competition. There is no
 reason as to why the small players have not ganged up and
 built joint infrastructure like 3G networks to rival
 Safaricom. I have always said hey should push for twin sim
 phones to make space on peoples phones but the tend to think
 selling galaxy phones will translate to profits.

 Look at Orange. They should have a monopoly on the
 iPhone game but now Safaricom sell iPhone too.

 Airtel treat clients like they are doing hem a favour
 right from the Kencell days. I don't know what Yu's
 strategy was.

 @Dennis and @Ali I think this is a bad deal and the
 regulator shouldn't allow it. It will further constrict
 choice and thus make a mockery of the license grant in the
 first place.

 On Tue, Mar 4, 2014 at 9:08 AM, Edith Adera <eadera at idrc.ca<mailto:eadera at idrc.ca>>
 wrote:
 BIG QUESTION
 Why can't Kenya sustain a "multi player"
 environment?  Ive argued for years that it has to do
 with peculiar "consumer behaviour" of Kenyans.
 Open competition has not worked, number portability has not
 worked.....what will sustain a vibrant multi player
 environment?

 I've just returned from Ghana where the 4+ players
 have all sorts of offerings whooing consumers left, right
 and centre...you have all sorts of incentives that seems to
 keep all players afloat....number portability works etc
 etc.

 Why not Kenya?

 What's your take?

 Edith
 ________________________________________
 From: kictanet [kictanet-bounces+eadera=idrc.ca at lists.kictanet.or.ke<mailto:idrc.ca at lists.kictanet.or.ke>]
 on behalf of Ali Hussein [ali at hussein.me.ke<mailto:ali at hussein.me.ke>]
 Sent: Monday, March 03, 2014 11:47 PM
 To: Edith Adera
 Cc: KICTAnet ICT Policy Discussions
 Subject: Re: [kictanet] Yu acquisition proposal to
 regulator

 Dennis

 Couldn't agree with you more.

 In this particular case the regulator will do best to
 stand down and let market forces play out.

 Ali Hussein

 +254 0770 906375<tel:%2B254%200770%20906375> /
 0713 601113<tel:0713%20601113>

 "I fear the day technology will surpass human
 interaction. The world will have a generation of
 idiots".  ~ Albert Einstein

 Sent from my iPad

 On Mar 4, 2014, at 7:18 AM, Dennis Kioko <dmbuvi at gmail.com<mailto:dmbuvi at gmail.com><mailto:dmbuvi at gmail.com<mailto:dmbuvi at gmail.com>>>
 wrote:

 I thought Kenya was a liberal country, what's with
 everyone wanting to place regulatory hurdles on Yu's
 exit.

 Biggest issue is Safaricom's acquisition of
 spectrum belonging to YU and thus putting more spectrum
 under them - which they badly need to improve network
 quality in urban areas which suffer from congestion.

 Industry analysts have long predicted consolidation of
 MNOs in African countries to 3 or 4 per country (see an
 interview I did with Coleago in December http://www.cio.co.ke/news/main-stories/coleago's-chris-gives-insights-on-lte-network-sharing,-spectrum,-future-and-regulation-of-africa-telecoms#
 )

 The buy out paves the way for licensing of MVNOs,
 which have an advantage of sharing existing capacity and
 unutilised resources rather than building out whole networks
 again.

 On 4 Mar 2014 05:32, "Ali Hussein" <ali at hussein.me.ke<mailto:ali at hussein.me.ke><mailto:ali at hussein.me.ke<mailto:ali at hussein.me.ke>>>
 wrote:
 Listers

 Yu has been bleeding red ink since it launched. It was
 inevitable. No public review will change that. The Network
 Effect is clearly at play here with Safaricom. None of the
 other players are profitable. Orange is being kept afloat by
 GoK and the mother company in France. Airtel considers Kenya
 a loss leader because of its 'strategic' nature in
 Africa and hence cannot abandon it. Not sure how long that
 will continue.

 The interesting bit here is that Orange may eventually
 buy Safaricom because of some actions in far off cities that
 we have no control over...that for me is the real
 risk..

 Ali Hussein

 +254 0770
 906375<tel:%2B254%200770%20906375><tel:%2B254%200770%20906375>
 / 0713
 601113<tel:0713%20601113><tel:0713%20601113>

 "I fear the day technology will surpass human
 interaction. The world will have a generation of
 idiots".  ~ Albert Einstein

 Sent from my iPad

 On Mar 3, 2014, at 11:20 PM, ICT Researcher <ict.researcher at yahoo.com<mailto:ict.researcher at yahoo.com><mailto:ict.researcher at yahoo.com<mailto:ict.researcher at yahoo.com>>>
 wrote:

 For starters, the company's assets true worth need
 to be independently established and its outstanding
 liabilities audited. Mere reported "spend a combined
 $100 million" inflated with 'sweatheart deal'
 exit premium does not in any way reflect the much lower true
 worth of the exiting business persons which no doubt a
 consortium of Kenyans investors can raise and potentially
 enable consumers to migrate enmasse to 100 p.c. "MKenya
 Network":-)

 On Monday, March 3, 2014 9:44 PM, "Wambua,
 Christopher" <Wambua at cck.go.ke<mailto:Wambua at cck.go.ke><mailto:Wambua at cck.go.ke<mailto:Wambua at cck.go.ke>>>
 wrote:
 The regulator has just received the application. We
 are in the process of reviewing the application with a view
 to deciding the way forward.  It is therefore too early
 to subject the application to public consultation.

 Wambua
 Sent from my BlackBerry 10 smartphone.
 From: ICT Researcher
 Sent: Monday, 3 March 2014 21:11 PM
 To: Wambua, Christopher
 Reply To: ICT Researcher
 Cc: KICTAnet ICT Policy Discussions
 Subject: [kictanet] Yu acquisition proposal to
 regulator

 Airtel, Safaricom seek to buy Essar’s Yu in Kenya -
 Safaricom will get Yu’s infrastructure, while Airtel is
 expected to acquire Yu’s subscriber base <http://www.livemint.com/Industry/BZZuR21BJsoJf6jksBhnVN/Airtel-Safaricom-seek-to-buy-Kenyan-rival-Essars-Yu.html>

 Considering the profoundly adverse Triopoly consumer
 choice consequences,
 Should the regulator not initiate a public
 consultation before decision making?

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