<html><body><div style="color:#000; background-color:#fff; font-family:times new roman, new york, times, serif;font-size:12pt">@Edith,<br><br>Good questions. Super profits are supposed to be good since they would signal to investors to jump into the Kenyan Market. However, as you note, our Kenyan telco market, particularly the Data /Internet side is largely a "duopoly" with Safaricom taking 73% of the internet market with the "Others" sharing out the 27% market share.<br><br><div><span>Obviously the "others" have failed to break Safaricoms dominant position and it is clear the reason why users dont migrate to "others" despite occasional price wars is their killer and globally renowned application "MPESA". As a very smalltime investor in Safaricom, I have no problem with the super-profits, but I do have a problem with the fact that as a country, we are not getting Internet Services that are affordable, high-quality and
geographically widely available.</span></div><div style="color: rgb(0, 0, 0); font-size: 16px; font-family: times new roman,new york,times,serif; background-color: transparent; font-style: normal;"><br><span></span></div>I know the latest CCK reports show that 16million of Kenyans use the internet (one of the highest % of population in Africa) but the same report says only 1million are on broadband quality of internet. This means that usage is restricted to light tasks such as email, twitter, facebook but unlikely to get into say Telecommuting, Videoconferencing, High-end research that requires massive movement of big-data, etc.<br><br>So Price and Quality amidst Super profits are the challenges the Regulator must face squarely.<br><br>walu. <br><div style="color: rgb(0, 0, 0); font-size: 16px; font-family: times new roman,new york,times,serif; background-color: transparent; font-style: normal;"><span><br></span></div><div><br></div> <div
style="font-family: times new roman, new york, times, serif; font-size: 12pt;"> <div style="font-family: times new roman, new york, times, serif; font-size: 12pt;"> <div dir="ltr"> <hr size="1"> <font face="Arial" size="2"> <b><span style="font-weight:bold;">From:</span></b> Edith Adera <eadera@idrc.ca><br> <b><span style="font-weight: bold;">To:</span></b> jwalu@yahoo.com <br><b><span style="font-weight: bold;">Cc:</span></b> KICTAnet - Media Editors Forum <mediaeditors@lists.kictanet.or.ke>; Alison Gillwald <agillwald@researchictafrica.net>; Christoph Stork <christoph.stork@googlemail.com>; KICTAnet ICT Policy Discussions <kictanet@lists.kictanet.or.ke> <br> <b><span style="font-weight: bold;">Sent:</span></b> Saturday, May 18, 2013 12:35 PM<br> <b><span style="font-weight: bold;">Subject:</span></b> Re: [mediaeditors] [kictanet] Safaricom's Super Profits<br> </font> </div> <div class="y_msg_container"><br><div
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<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Barrack and Ngethe,</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">I think otherwise.</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">The super-profits seem to arise <u>NOT</u> 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. </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">So this has created some ARTIFICIAL “exclusivity” of Safaricom products creating monopolistic or oligopolistic tendencies in the Kenyan telecom market.</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">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?)</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">I would really like to hear from Research ICT Africa who have been carrying out
<u>consistent</u> 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” (<a rel="nofollow" target="_blank" href="http://www.researchictafrica.net/publications.php">http://www.researchictafrica.net/publications.php</a>)
– our own Prof. Waema, Muriuki Mureithi, Dr Adeya have been leading the Kenyan studies. I have also copied Christorph Stork and Alison Gilwald,
<span style="color:red;">why Kenya is different?</span></span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Would also be great to hear from Matano (CCK)?</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Edith</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span style="" lang="EN-US">-----Original Message-----<br>
From: ngethe.kariuki2007@yahoo.co.uk [mailto:ngethe.kariuki2007@yahoo.co.uk] <br>
Sent: May 18, 2013 11:48 AM<br>
To: Edith Adera; kictanet<br>
Cc: KICTAnet - Media Editors Forum; KICTAnet ICT Policy Discussions<br>
Subject: Re: [kictanet] Safaricom's Super Profits</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Edith,Listers,</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Interesting questions raised.The results are not entirely unexpected and that is why,inter alia, CCK and Competition Authority were established.</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">John Kariuki</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Sent from my BlackBerry®</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">-----Original Message-----</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">From: Edith Adera <<a rel="nofollow" ymailto="mailto:eadera@idrc.ca" target="_blank" href="mailto:eadera@idrc.ca"><span style="color:windowtext;text-decoration:none;">eadera@idrc.ca</span></a>></span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Sender: "kictanet"</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"><<a rel="nofollow" ymailto="mailto:kictanet-bounces+ngethe.kariuki2007=yahoo.co.uk@lists.kictanet.or.ke" target="_blank" href="mailto:kictanet-bounces+ngethe.kariuki2007=yahoo.co.uk@lists.kictanet.or.ke"><span style="color:windowtext;text-decoration:none;">kictanet-bounces+ngethe.kariuki2007=yahoo.co.uk@lists.kictanet.or.ke</span></a>></span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Date: Sat, 18 May 2013 08:38:42 </span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">To: <<a rel="nofollow" ymailto="mailto:ngethe.kariuki2007@yahoo.co.uk" target="_blank" href="mailto:ngethe.kariuki2007@yahoo.co.uk"><span style="color:windowtext;text-decoration:none;">ngethe.kariuki2007@yahoo.co.uk</span></a>></span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Cc: KICTAnet - Media Editors Forum<<a rel="nofollow" ymailto="mailto:mediaeditors@lists.kictanet.or.ke" target="_blank" href="mailto:mediaeditors@lists.kictanet.or.ke"><span style="color:windowtext;text-decoration:none;">mediaeditors@lists.kictanet.or.ke</span></a>>; KICTAnet ICT Policy Discussions<<a rel="nofollow" ymailto="mailto:kictanet@lists.kictanet.or.ke" target="_blank" href="mailto:kictanet@lists.kictanet.or.ke"><span style="color:windowtext;text-decoration:none;">kictanet@lists.kictanet.or.ke</span></a>></span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US">Subject: [kictanet] Safaricom's Super Profits</span></div>
<div class="yiv5965826298MsoPlainText"><span lang="EN-US"> </span></div>
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