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Did Airtel Shoot Themselves in the Foot?
Rank: Elder Joined: 6/27/2008 Posts: 4,114
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I was talking to a marketing manager from SCOM and he pointed out an interesting view on the ongoing price wars triggered by Airtel. At one bob per minute, subscribers are buying very few scratch cards; therefore, retailers are selling very few cards as well [obviously!] Consequently, many retailers are finding the business of stocking Airtel cards unsustainable and are slowly but surely opting out in favour of SCOM. According to this manager [and I appreciate his bias], it is only a matter of time before Airtel can't find anyone willing to distribute their cheap airtime. Apparently, one of their biggest agents in Nairobi is planning to ditch the business! Now that is probably an eventuality the Airtel people never thought about... mukiha attached the following image(s):  shootfoot.jpg (5kb) downloaded 0 time(s).Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 6/11/2008 Posts: 257
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mukiha wrote:I was talking to a marketing manager from SCOM and he pointed out an interesting view on the ongoing price wars triggered by Airtel.
At one bob per minute, subscribers are buying very few scratch cards; therefore, retailers are selling very few cards as well [obviously!]
Consequently, many retailers are finding the business of stocking Airtel cards unsustainable and are slowly but surely opting out in favour of SCOM.
According to this manager [and I appreciate his bias], it is only a matter of time before Airtel can't find anyone willing to distribute their cheap airtime. Apparently, one of their biggest agents in Nairobi is planning to ditch the business!
Now that is probably an eventuality the Airtel people never thought about... Bwana Mukhia Seems you are still holding safaricom shares I want to be a millionaire.
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Rank: New-farer Joined: 10/27/2010 Posts: 26 Location: NBI
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That may be true, but SAFCOM will also face the same challenge because it has reduced its calling rates. However the sale of scratch cards is not something your typical retailer or kiosk owner undertakes as THE bread and butter of his/her business, it’s just one of the many, and more so a convenient product to have. Also worthy of note, is that the retailer margins are unaffected and that the cards are moving faster now than they were before. It will definitely affect the volume of repeat sales throughout the distribution channels of all the operators, but I do not think any retailer is about to remove the product from their shelves. The situation is just unfolding as it should. WTF
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Rank: Chief Joined: 1/3/2007 Posts: 18,095 Location: Nairobi
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I don't buy many Airtel cards... I just use Zap or my bank [I can buy airtime using my bank account. No charge. Minimum 100/- max 10,000/-] The phone card retailer is on his/her way out but an interesting perspective though about a boycott by distributors... Though... I do not see why a retailer selling airtime cards would not sell Airtel [simply stocks fewer than Safaricom]... As long as customers ask for it why not stock it...? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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I think their Airtel's biggest danger and someone wise should be ringing the warning bells there is they are losing Brand Equity. As we say, a brand is a promise, Airtel assumed brand promise has become cheap rates or let's say 1bob. I can't imagine what will happen when they increase their calling rates by a cent.
BBI will solve it :)
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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Sounds to me like a good time for Airtell to ditch the blood sucking middle-men and distribute via sales people like all other FMCG (airtime is a FMCG of soughts) "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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I dont think airtime sales is the problem.Actually many agents make money through simcard sales and money transfer services,safaricom agents must also be feeling the heat from loss of Airtime sales. Most airtel agents are feeling the heat becoz ZAP is not competitive as it should..I hav seen most zap agents who dont hav the float. '......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
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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DISCLAIMER: I have been using Kencell/Celtel/Zain/Airtel since inception. I haven never had a problem getting scratch cards....not even now. I guess the SCOM marketing manager's opinion is biased; but that doesn't make it any less interesting, does it? Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 6/21/2010 Posts: 514 Location: Nairobi
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@Mukiha, the story might have some truth in it. I have been in the business for sometime and truly speaking the rate at which cards are going has gone down and in turn brought the matter of opportunity cost to the fore. Most guys who normaly took lots of airtel stock when the price war began have actually reduced their uptake and their main reason is normally the slow movement of the Airtel stock coz they say most of their customers buy 'safaricom.' Though safaricom's uptake has also gone down but not comparable to Airtel's. 'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary
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Rank: Elder Joined: 6/19/2008 Posts: 4,268
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kamaug wrote:That may be true, but SAFCOM will also face the same challenge because it has reduced its calling rates.
However the sale of scratch cards is not something your typical retailer or kiosk owner undertakes as THE bread and butter of his/her business, it’s just one of the many, and more so a convenient product to have.
Also worthy of note, is that the retailer margins are unaffected and that the cards are moving faster now than they were before.
It will definitely affect the volume of repeat sales throughout the distribution channels of all the operators, but I do not think any retailer is about to remove the product from their shelves.
The situation is just unfolding as it should. Really? How? I am in safaricom and even so, i load 100 bob and say for 2-3 days without loading. Before, i was basically using like 100 bob every day. If the guy was making 50cts on my card each day, now he is making the same in 2-3 days. Now if they cut my calling rates by half to 1 bob i will definitely forget the route to the shop!
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Rank: Veteran Joined: 11/4/2008 Posts: 1,289 Location: Nairobi
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Mukiha could be having a point. A pal wanted to start selling airtime out of town. But once the wars started, it did not make business sense. The only reason why Zap does not have agents is that there is not enough to sustain a dealer at the current rates.
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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Mpesa has turned to be a hard one to crack for airtel, now they want to use the PM to reign in this bulldog. I am also suspicious of AIRTELs intentions, why would it go to such length instead of popularizing their own solution, I think its wrong for a company to infringe on someones else's innovation just to ride on its popularity.If the PM heeds to Airtels so called proposal it will be a big blow to innovation and it might kill so many business opportunities. The reason I say it would kill too many job opportunities is because ,airtel is hell bent on having a clearing house that will be under central bank, so as enable it continue with its strategy of cutting cost by leveraging on safaricoms agents thereby investing very little in the money transfer market.this will impact this sector negatively given that the Mpesa solution will be commoditized and hence loose its premium status it has been enjoying this will not only affect safaricom competitiveness but also make its revenue base crumble like a cookie. http://www.businessdaily.../-/100x0xy/-/index.html
'......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
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Rank: Member Joined: 2/11/2011 Posts: 240 Location: jamuhuri ya kenya
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mukiha wrote:I was talking to a marketing manager from SCOM and what did you expect the marketing manager of a rival company to tell you?
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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jimmy1 wrote:mukiha wrote:I was talking to a marketing manager from SCOM and what did you expect the marketing manager of a rival company to tell you? Read my post again and you will that I say "I appreciate his bias"!! Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: New-farer Joined: 6/3/2010 Posts: 96
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Naskia Top structure of Safaricom has undergone a realignment....
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Rank: Veteran Joined: 5/18/2008 Posts: 796
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Papa Investor wrote:Naskia Top structure of Safaricom has undergone a realignment.... Major realignment!
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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well finaly the chicken has come home to roost.After Barorot resignation 2 months after beig appointed, now staff are supposed to start their strike at 10am reason being poor working condition and remuneration concerns. '......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
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Rank: Member Joined: 7/31/2007 Posts: 341
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selah wrote:well finaly the chicken has come home to roost.After Barorot resignation 2 months after beig appointed, now staff are supposed to start their strike at 10am reason being poor working condition and remuneration concerns. Wapi link?
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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@chris I dont know if they have gone ahead with the strike but in the mean time check out Barorot resignation as I get the latest update on the strike. http://www.nation.co.ke/...2/-/viuhnhz/-/index.html'......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
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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Apparently Airtel kenya has denied any claims of an ongoing strike and Barorot resigned for personal reasons. The strike rumors were spread by disgruntled Kenyan employees who seem bitter but lack guts to carry on with the strike. '......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
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