[kictanet] "Talk to Safaricom" Responses to Day 2 Questions

[Barrack Otieno]

Many thanks for the responses Steve. I appreciate the feedback.

Regards
On Feb 15, 2017 5:56 PM, "Stephen Chege via kictanet" <
kictanet at lists.kictanet.or.ke> wrote:

> Dear all
>
>
>
> Below are the responses to Day 2 Questions.
>
>
>
> We are picking up the supplementary questions and will respond to them.
>
>
>
> regards
>
>
>
> Steve
>
>
>
> *Talk-2-Safaricom, Day 2 (Tuesday 7th Feb)- Competition Issues*
>
> *Guideline*: Share your perspective as to whether or not Safaricom is
> dominant in the following sub-sectors and whether some intervention is
> required from the regulator.
>
>
>
> The current data from CA
> <http://www.ca.go.ke/images/downloads/STATISTICS/Sector%20Statistics%20Report%20Q1%202016-2017.pdf>
> (Q1, 2016-17) could be a useful guideline for the dominance debate. It
> gives Safcom the following market share -
>
> a)      Mobile Subscribers (69% of all subscribers, closest rival17.5%) ‘;
>
> b)      Voice Traffic (76% of voice traffic, closest rival 13.8%)
>
> c)      Data/Internet Subsector, (63.2% of mobile internet subscriptions,
> closest rival 21%)
>
> d)      Mobile Money Transactions ( 81% of all mobile money transactions,
> closes rival 16%)
>
>
>
> I am sure we cannot ask or blame Safaricom for what it may consider a successful state of affairs :-)  So please share your perspective as to whether or not Safaricom is dominant in the following sub-sectors and whether or not some intervention is required from the regulator in as far as making the market more competitive.
>
>
>
> Floor is open.
>
> *Questions+Comments from Discussions:*
>
> *Ali Hussein*
>
> *@Walu  What strategic purpose would splitting Safaricom have on their business? I'm fundamentally opposed to government imposed splits. Let's look at one of the most famous splits:-  Standard Oil in the US. It was split into 34 companies by the justice department. The most prominent of these were Exxon, Mobil and Chevron. Many years later through 'Mergers and Acquisitions' the original company is now more or less back as ExxonMobil, whose CEO has incidentally been appointed by The Donald to be Secretary of State.  **https://en.m.wikipedia.org/wiki/Standard_Oil <https://en.m.wikipedia.org/wiki/Standard_Oil>**  Having said that I think Mpesa remaining in Safaricom is stunting it's growth. But then that's their prerogative not anybody else's. I keep on saying that someone out there is quietly plotting to eat Safaricom's lunch. If they snooze.*
>
>
>
> Ali, Walu we cannot speculate as to what action will be proposed against
> Safaricom. However we take the very strong view that competition in our
> sector should not be viewed only from the perspective of the so called
> smaller players.  Questions should be asked how the situation came to be
> given that two of the current players were licensed at practically the same
> time. Specifically, the issue of investment in infrastructure should be
> examined in detail. Regulatory intervention should not be used to reward
> failure to invest. Also Ali correctly states, we also have to keep
> investing and innovating or else we shall soon be someone’s lunch.
>
> Also, the World Bank’s Global Economic Prospects Report
> <http://pubdocs.worldbank.org/en/842861463605615468/Global-Economic-Prospects-June-2016-Divergences-and-risks.pdf>
> (2016) notes, if Kenya’s economy wants to continue to grow at a ‘robust’
> pace, empowering the mobile and technology sectors is critical as they
> provide the critical infrastructure needed for growth.
>
>
>
> *Barrack Otieno*
>
> *Many thanks for your email, i applaud Safaricom for its aggressive and smart approach that has made it a leader. My question will be focused on connecting the unconnected.  *
>
> *Is there an effort to tailor make the customer service platform to include other local languages say, Luhya, Luo or Maa?, i think this will encourage more citizens who traditionally dont speak English and or Swahili to embrace telecommunications and or related services. *
>
>
>
> Good question Barrack, - we undertake a lot of investment in people and
> systems to ensure that all our customers are able to get service from our
> Call Centre in their preferred language. We have local dialect speakers in
> our Customer Centres and our Retail touch points who can serve all Kenyans
> in the event that they are not conversant with Kiswahili or English. So
> this is well covered. In fact our concern now is Chinese speakers! We have
> noted a significant number of calls from these customers.
>
>
>
> *2) What is Safaricoms experience with Mshwari - payments , defaults in light of the challenging economic times ?, i am sure this will be an indicator of the health of the economy. *
>
>
>
> M-Shwari is a CBA product that is delivered via the Safaricom platform.
> According to CBA, less than 2% of borrowers default on their repayments.
> M-Shwari leverages the ubiquity of mobile devices, Safaricom’s M-PESA and
> partnership with CBA to enable Kenyans operate and maintain a bank account
> through their mobile device. This service is quite successful, and in every
> single minute our two partners (CBA and KCB) process two loans every second
> on both their M-Shwari and KCB-M-PESA products.
>
>
>
> *Secondly i am curious to know the mechanism that is in place to refund people who might have money on Mpesa or Mshwari and pass on yet their relatives don't claim the money. *
>
>
>
> Our policy is that the M-PESA and M-Shwari balances are maintained in the
> individual’s accounts until they are claimed by their personal
> representatives or executors of their Will. To make a claim, such
> representatives or executors are required to present Letters of
> Administration or a Grant of Probate issued by a Court and complete the
> relevant claim forms available at any of our retail shops countrywide. The
> money is then paid to them. If this money is not claimed within two years,
> then the law requires us to remit the balances in those accounts to the
> Unclaimed Financial Assets Authority.
>
>
>
> *3) On the data front , can we have a status update of the Safaricom Fibre to the Home Project?, which areas have been covered?, which areas have not been covered, any challenges the company has faced from the citizens, county governments and regulators.  Regards*
>
> We have just launched this project which complements our strategy to
> provide our customers end-to-end connectivity whether they are on-the-go or
> at home. So far we have fibre installed next to 20,000 homes to date
> meaning it will be easy to connect these residential areas to high speed
> fixed data. This is an ongoing effort which we see as our next strategic
> area for development.
>
> A lot of the concerns from citizens is the troublesome excavation works
> where the fibre is buried. We deal with these by ensuring our contractors
> restore the excavated areas back to the previous condition. With County
> Governments the concern is around Way Leaves. A number of us in this forum
> were involved in the drafting of the Critical Infrastructure Bill which,
> among other issues, sought to address the issues of delays in obtaining Way
> Leaves and in general ensuring that ICT infrastructure (including fibre
> optic cable) is deemed as utility and exempted from delays in approvals. I
> hope that Bill eventually passes into law.
>
>
>
> *Victor Kapiyo*
>
> *Safaricom has over the years benefited from its current position, raking
> in billions in profits for its shareholders. As a public listed company,
> what has the company done so far to confer some of these benefits to the
> public, whether as part of its CSR, investments or approaches in business
> operations etc.?  Regards, *
>
> As a business, we have taken a conscious decision that our purpose is not
> solely to build value for our shareholders- which is an important part of
> what we do. We have at the centre of all the business we undertake a
> commitment to Transform Lives. We do this beyond the traditional realm of
> voice, data and mobile money services through partnerships in health,
> agriculture, the music and the arts space, backing and providing thought
> leadership for innovation, leading a corporate push to adopt the SDGs as
> well as projects such as the National Surveillance, Communication and
> Control System for the National Police Service to enhance security or the
> 23,000 primary schools which will benefit from free internet connectivity
> from Safaricom.
>
>
>
> Under our Corporate Responsibility program, we have helped over 1.2
> million Kenyans receive health services, put 800,000 students in decent
> classrooms, and supported 1.25 million Kenyans through disaster response.
> We have provided over 300,000 people with access safe and clean water, and
> have economically empowered over 250,000 people. You may see more of our
> projects here: www.safaricom.co.ke/foundation and I invite any one of you
> to let us know if they are any areas that we should cover more. We truly
> believe in building our relevance beyond the bottom line to create a
> sustainable organisation that adds value for all Kenyans.
>
>
>
> *Grace Bomu*
>
> *I will ask a question on behalf of my teenager friend, "If Safcom makes so much profit,  why can't it lower data costs?*
>
> Hi Grace, please see my earlier response to Sidney on this matter.
>
>
>
> *Odhiambo Washington*
>
> *On dominance on the above (except (c), I cannot blame Safaricom or even
> try to mention dominance. It's something they have worked for. However,
> they also need to use this gigantic position to ensure coverage everywhere
> while lowering tariffs on voice, data and mostly Money Transfer fees.
> Talking of coverage, I have severally tweeted Safaricom about the lack of
> network coverage along the road from Kapiti Area all the way to that
> turn-off to Nanyuki. I think the place is called Marwa. *
>
> *I am wondering whether they take the feedback seriously or it's just that
> they don't expect much revenue from travelers on that section of the
> journey to Nyeri/Nanyuki. And what about to Ole Polos (asking for Barrack!)
> ??  *
>
>
>
> Washington, we take all customer feedback seriously. It may take us some
> time to rectify some problems but we do act upon the complaints. As
> mentioned yesterday, our team is getting in touch with you to pinpoint
> these problem areas.
>
>
>
> A deep analysis will tell you that Safaricom charges for money transfer
> are very expensive. The trick is in the amounts you transfer - and they
> take advantage of the fact that most clients will want to do a transfer at
> once, instead of in bits, which I don't think is fair. The cost of sending
> 2,500 whether at once or in 1,000, 1000, 500 should be the same. Afterall
> it's all _digital_ money, not some individuals carrying the cash to
> destinations/final users :-)
>
>
>
> As mentioned before, we believe that our charges are competitive and
> reflect the convenience of transferring your money securely and
> efficiently. It is also important to note that there is a network cost
> element to each portion of your transaction, which is why the fees cannot
> be standardised in the manner you suggest.
>
>
>
> On money transfer and especially with regard to customer (or is it
> consumer?) protection, I still think Safaricom is capable of doing more
> with regard to those transactions where someone ends up sending to the
> wrong number. Much as they have introduced number lookups from the contacts
> stored on the SIM card, I believe number lookups from the contacts stored
> on the phone shouldn't be such an uphill task. Do they have plans for this?
>
> Our second generation M-PESA system has enabled the service known as
> Hakikisha, which allows you to confirm the recipient details prior to the
> transaction being completed, using the customer’s officially registered
> details. Furthermore, we have made it very simple to initiate a reversal in
> the event is erroneously sent to the wrong recipient.
>
>
>
> Nonetheless I can confirm that we are working on an M-PESA App which will,
> among other things, be able to seamlessly retrieve recipient details
> directly from the contacts in your phonebook further minimising chances of
> error. The App is currently being Piloted.
>
>
>
> *Being almost the world's pioneer of mobile money transfer, can they also
> pioneer a legal mechanism to deal with/mitigate cases where people have
> sent money to the wrong numbers by mistake? That is one area that remains
> wanting.  *
>
> When a customer calls us and lets us know that the money was sent to the
> wrong number, we can usually reverse it if the money has not been
> withdrawn. However if the money has been withdrawn they are in essence
> raising a legal dispute. Our role as a telecoms provider is limited to
> service provision and therefore we are not empowered to take on the
> investigative elements of such a legal dispute.
>
> What we can do is to provide network tools that can assist with minimising
> the chance of error – which is why introduced services like Hakikisha and
> engage in continuous customer education around this issue.
>
>
>
> *At the moment, their 15sec option to mitigate that isn't quite intuitive.
> The "Cancel' option actually means 'go ahead and do the transfer', but most
> people have confused it with what "Cancel" in any other realm means. They
> should re-engineer the option to have the meaning/options expected by
> users..(Oh, was I supposed to give feedback or ask questions?) Besides,
> they should increase the time to 30secs, and also sponsor a media campaign
> to enlighten their clients. *
>
> Washington, this solution is flash-enabled, so whether the button says
> ‘Ignore’ while others say ‘Cancel’ depends purely on the type of handset
> the user owns. The simple rule of thumb is that any response is required in
> order to stop the transactions, not responding means the transactions will
> proceed. Currently the timeout period is 25 seconds, which some users say
> is too long!
>
>
>
> *Walu J*
>
> *I just have one question for Safcom with respect to Competition. Are they willing to: *
>
> *a) Be split into several independent units? As in make the Mobile money business (MPESA) a separate and autonomous unit from their Voice and Data side of business?  *
>
> We believe that the decision to split or not to split should lie with the company. All I will say is that our current model has worked very well for us so far.
>
>
>
> *b)  Open up MPESA service such that if I vuka(migrate) to competition e.g Airtel, I do not lose the MPESA facility? Obviously this would be an affront to their 'stronghold' but sometimes it may spice up the market a bit.  This maybe necessary considering that their market share lead has not changed much over the last 10years.  Which may point to a market failure or maybe they are just clever than everyone else :-). *
>
> That is a big ask Walu but again the decision to implement such an initiative should lie with us. Innovation is the fuel that powers success in business. If this is taken away and commoditised through Regulatory intervention this will send all the wrong signals.
>
>
>
> *Timothy Oriedo*
>
> *My question on today's topic.  Are Frenemy and Coopetion terms alien to Safaricom's strategy?  *
>
> *I observe aggressive canibalization forward,  backward,  laterally and upwards. With previous moves of backward integration to own  infrastructure distribution - laying out of own fibre capacity reducing lease to capacity and forward integration of remodelling the airtime / scratchcards product distribution structure of their dealerships making it less lucrative for them to operate.   Laterally through launch of peripheral services that would rather belong to their business partners email.e.g mobile money-banking, the big box-media etc.  *
>
> *Isn't it unfair to compete with your suppliers and clients in the name of value chain innovation ?  *
>
>
>
> Wow! There are many loaded statements here, most of which are not entirely factual.  Be that as it may, we compete fairly and we are interested in operating in an environment where other operators thrive because we believe there is significant opportunity for us all.
>
> Timothy trust me when I say we want to Transform Lives. It is at the centre of all we do – I have personally seen business plans set aside because they were not transformative for our customer.
>
> Even as we invest in our own fibre network, we are working with a number of local companies to implement the service – the same goes for any other element of our business including airtime distribution, which is done primarily through over 250,000 dealers country-wide.
>
> At a broader level, our cross-industry partnerships such as those we have with M-KOPA, KARA <http://www.capitalfm.co.ke/business/2017/02/safaricom-partners-kara-boost-neighborhood-security/> or Mulley’s Supermarket <https://www.youtube.com/watch?v=5YlczoCpvYI> – allow us to merge our collective strengths to provide unique products for the market.
>
>
>
> Lastly apart from mpesa transaction of less than 100 Bob,  Please Call Me and checking for airtime balance which is the other Freemium service that safaricom is know for?
>
> The way to look at these so called ‘Freemium’ services is their reach and value to the person using them. To a college student who wants to communicate but doesn’t have any airtime a ‘Please Call Me Text” is not a small thing. You can imagine this for M-PESA customer who needs to send Kshs. 100. I can confirm that transaction numbers in this category have grown by more than 130% since we waived the charges.  These may appear to be just two services but their reach is enormous given the number of customers who use them.
>
>
>
> Other ‘Freemiums’ include access to our website – any time you land on the site there is no charge and of course our Customer Care.
>
>
>
> *Sydney Ochieng*
>
> *Safaricom has been rumored to harass agents who want to run competitors' mobile money solutions, has this practice stopped? What is Safaricom doing to stop its agents from doing this?*
>
> Sidney, as you correctly state, that is a rumour. We opened up our M-PESA agency network in 2015 (we have now grown that network to over 124,000) – which means that our agents are free to provide services for other operators. You just need to walk around CBD and other towns in Kenya to see the multiple branding attesting to this.
>
>
> ------------------------------
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