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Could Safaricom issue a profit warning?
selah
#121 Posted : Thursday, February 24, 2011 12:03:01 PM
Rank: Elder

Joined: 10/13/2009
Posts: 1,950
Location: in kenya
chemos wrote:
Airtel are waiting to unleash another war at 50cts per minute after the expiry of feelanga free.... Now this will be the real test on safcom because they cant afford to remain on 3 bob and yet again if they reduce to even 2 bob the infrastructure will be in ICU... its a double edge sword for them.


Even if it charged 50cts which Yu and Orange have tried charging some time back or the 10/= per day tarriff they are currently running,they will not achieve the level of loyalty safaricom enjoys...they will attract customers to their network but When another network offers lower prices they will migrate.
'......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
chemos
#122 Posted : Thursday, February 24, 2011 12:07:18 PM
Rank: Elder

Joined: 11/28/2006
Posts: 1,799
VituVingiSana wrote:
chemos wrote:
Airtel are waiting to unleash another war at 50cts per minute after the expiry of feelanga free.... Now this will be the real test on safcom because they cant afford to remain on 3 bob and yet again if they reduce to even 2 bob the infrastructure will be in ICU... its a double edge sword for them.
The marginal cost of minutes WITHIN the network must be very low e.g. 25 cents/minute. So for Airtel, they can keep 3/- across networks but still make money as long as you call WITHIN the network.



But there is the ripple effect of loosing subs to airtel. You can only do so much to lock in subs. with 50cts who in their right minds would not want to be on airtel... hata kama damu yako ni green kweli utakaa ukiona wengine wakipiga at 50 cts..
Safcom at the moment are fighting to try and retain as much subs within the network and to do this they have to appease them by lowering the rates but at the same time the infrastructure is really getting a beating as it is and if airtel were to go for this killer punch then safcom would have a hard time trying to support calls at sub 2 bob..

look at it this way. at 2 bob or below traffic will almost double at safaricom without adding any capacity and thus cause so much issues.. how long will subs keep up with a congested network.. am sure they will gladly move to airtel where they will get more for less
My 2 cents
#123 Posted : Thursday, February 24, 2011 12:09:22 PM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,090
Dunno when Airtel will realise that 'price' is not the only variable. They could make it completely free and it still would not be that easy to steal safcom's customers.............
VituVingiSana
#124 Posted : Thursday, February 24, 2011 12:19:45 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,351
Location: Nairobi
Apparently the on-net SMS that Safaricom charged 3.50 [for a long time] costs them less than 10cents!!! So when Airtel came in with 1/- [off-net] SMS, it caused a stir...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
selah
#125 Posted : Thursday, February 24, 2011 12:31:44 PM
Rank: Elder

Joined: 10/13/2009
Posts: 1,950
Location: in kenya
@chemos your argument would holdwater if the 50cts offer is across networks but if onnet calls the migration will not be as high as you want us to believe...I know of some pple who depend on safaricom not on the voice but MPesa and its easy functionality just like Nokia which enjoys a monopolistic following here in kenya even though we have cheaper and better phones.
'......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
chemos
#126 Posted : Thursday, February 24, 2011 12:43:19 PM
Rank: Elder

Joined: 11/28/2006
Posts: 1,799
selah wrote:
@chemos your argument would holdwater if the 50cts offer is across networks but if onnet calls the migration will not be as high as you want us to believe...I know of some pple who depend on safaricom not on the voice but MPesa and its easy functionality just like Nokia which enjoys a monopolistic following here in kenya even though we have cheaper and better phones.



Bulk of safcom calls are on-net. so def on net calls would double. Ok the mass migration might or might not be massive that for sure no one knows with a certainity unless you are Karumanzila.
My point is Safcom cannot sit and wait to see their subs moving to airtel. But the problem is if they lower their call rates further down the infrastructure will start to cramble.
The capacity they are going to carry is what was projected for them to carry in 2012 at previous rates and after doing all major expansions.

VituVingiSana
#127 Posted : Thursday, February 24, 2011 12:44:41 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,351
Location: Nairobi
selah wrote:
@chemos your argument would holdwater if the 50cts offer is across networks but if onnet calls the migration will not be as high as you want us to believe...I know of some pple who depend on safaricom not on the voice but MPesa and its easy functionality just like Nokia which enjoys a monopolistic following here in kenya even though we have cheaper and better phones.
M-Pesa is sticky [definitely a growth driver for Safaricom] but most (spending) Kenyans are multi-SIM folks!

Bottomline: Will the low on-net & off-net prices by Airtel [YU + Orange] affect Safaricom profits? Yes... Not in 2010 but in 2011

As for Kenya's economy... We will benefit from lower calling costs!

Kenyans buy foreign assembled [instead of Mecer] computers without blinking an eyelid... yet complain about the non-existent threat of 'loss' of jobs!

Airtel's expansion will bring higher-enf ENGINEERING jobs for Kenyans!

Airtel Africa HQ will be Nairobi. Jobs for construction folks + high-end jobs for developers & engineers!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Jamani
#128 Posted : Thursday, February 24, 2011 1:23:19 PM
Rank: Elder

Joined: 9/12/2006
Posts: 1,554
@VVS i agree you on most but differ on these

As for Kenya's economy... We will benefit from lower calling costs! This will affect technological advancement hence shortlived

Airtel's expansion will bring higher-enf ENGINEERING jobs for Kenyans! false, planning for airtel and engineering is centralised in india their model is only touch services are required on site(watu wa mkono)

Airtel Africa HQ will be Nairobi. Jobs for construction folks + high-end jobs for developers & engineers! True for HQ its in Kenya already false for highend jobs i challenge you to walk into their HQ currently on 2nd floor at parkside towers and you will see mumbai or infact kerela for yourself(black indias)
VituVingiSana
#129 Posted : Thursday, February 24, 2011 1:29:22 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,351
Location: Nairobi
@jamani - BTW, the networks in Kenya for safaricom are being built out by the chinese [Huawei & ZTE]!
At least Airtel uses Nokia/Siemens who have a good number of (young) Kenyans. I know a chap who works for Nokia.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Jamani
#130 Posted : Thursday, February 24, 2011 1:40:44 PM
Rank: Elder

Joined: 9/12/2006
Posts: 1,554
VituVingiSana wrote:
@jamani - BTW, the networks in Kenya for safaricom are being built out by the chinese [Huawei & ZTE]!
At least Airtel uses Nokia/Siemens who have a good number of (young) Kenyans. I know a chap who works for Nokia.


NO VVS, the network has many different nodes, and Huaweii are supplying some nodes to safcom, infact siemens was the single supply of nodes to safcom before they opted out due to IN or switch issues sometime back. They now will start using alcatel also for LTE. so what am saying is the network has different nodes and depending on specs and cost operators choose the best.

As for Airtel, they had a single supplier in alcatel, thats when their network was supper, then they went into Ericsson and issues started today they use both Ericsson and Alcatel on the core its Ericsson on the BSS its multivendor.
And for information all the vendors have shop in nairobi and young Kenyas employed in them.
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