[kictanet] Yu acquisition proposal to regulator

Thu Mar 6 20:47:50 EAT 2014

Walu,Listers,

The primary  issue here is one of "merger" which is well defined in the Competition Act,Cap504,Laws of Kenya whose primary role is to promote and safeguard competition...etc etc.
.It is a telecommunications issue on secondary basis and CAK will have some role to play.
In some countries, they call it "concurrent jurisdiction" and clearly define the relationship between the regulators.It does not seem so in Kenya and the real  legal muscle may  well lie with the Competition Authority .

John Kariuki

On Tuesday, 4 March 2014, 14:52, Walubengo J <jwalu at yahoo.com> wrote:

@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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