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Kibaki intervenes and stops mobile call charge reductions
Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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From an economics point of view, its a stupid decision. Inflation is going north very fast and anything that can help slow it down should be encouraged. Turnover has actually increased because more people can now use their phones total rather than flashing. This should then increase tax collection overtime, In terms of ROI, these are private entities, as already demonstrated by Safcom, all the profit-seeking telcos are moving into data provision where they can still dictate price. And how it does help wanjiku if you stop telcos reducing her cost of calling. ABK The Governor of Nyeri - 2017
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Rank: Veteran Joined: 4/16/2010 Posts: 906 Location: Nairobi
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jawz1 wrote:
No one complained (apart from VVS) when oil companies were not allowed freedom in setting their prices. Heck, Kenyans even cheered.
I remember several Wazuans including myself calling the oil price controls populist. People's pockets should be allowed to decide this type of thing.
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Rank: Elder Joined: 12/6/2008 Posts: 3,548
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If you have never heard of subsidies and their effects on markets then don't pretend to talk about mobile price wars, you just put your ignorance on display. Go get a secondary school economics book and read about cross-market subsidies. Kibaki is acting with a lot of information on what is happening. His decision is founded on sound economic theory. A New Kenya
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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muchknow-cross-subsidies effect only applies where the additional products are not profitable. Its a side show especially in a competitive and growing market like telco. By the way, my point on impact of price decreases on tax collection (turnover goes up overall as Kenyans make more calls)on profitability of the various players can be seen by looking Safcom annual result presentation for 2010. Page 6/7/8 are very informative. According to this, Safcom only so a fall of 1.7% in its voice revenue! Point number two is that other types of revenue are going up massively. http://www.safaricom.co....esults_Presentation.pdf Finally, a word about mobile penetration. Kenya's is at just over 50%. The other 50% can't afford to make calls at current prices. So info does the great General have that we don't have? The Governor of Nyeri - 2017
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Rank: Member Joined: 4/15/2009 Posts: 371
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[
Finally, a word about mobile penetration. Kenya's is at just over 50%. The other 50% can't afford to make calls at current prices.
So info does the great General have that we don't have?
[
This is a fallacy. You mean the other 50% have mobile phones, know how to use them and are in places covered by mobile networks but cannot afford airtime?
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Rank: Elder Joined: 12/6/2008 Posts: 3,548
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Wa bushes, airtel is not profitable here and safcom should be perhaps more profitable. Compare Safaricom Kenya and Airtel worlwide. How can safcom think of expanding like airtel? Out of Kenya like airtel out of India? Or Kenya does not deserve huge companies with huge potential? Is that what you are saying? They should be squashed by Indian firms? A New Kenya
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Rank: Member Joined: 12/2/2009 Posts: 286 Location: Nairobi
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I agree with @Caveman. Mobile penetration in Kenya has never been about high tariffs, it is first and foremost about network availability; and secondly about handset affordability. That is why whenever telcos promote some relatively cheap handsets, subscriber numbers make significant improvements. Now at low rates, no telco worth its salt will venture out in the other half of Kenya's landmass that is not covered since there wont be business sense to do so. Kibaki amescore BIGTIME! The laudable is more often than not rendered laughable by overclaim
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Rank: Member Joined: 8/4/2008 Posts: 205 Location: Nairobi
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KenyanLyrics wrote:jawz1 wrote:
No one complained (apart from VVS) when oil companies were not allowed freedom in setting their prices. Heck, Kenyans even cheered.
I remember several Wazuans including myself calling the oil price controls populist. People's pockets should be allowed to decide this type of thing. I humbly stand corrected and apologize for misquote  "When the pupil is ready to learn, a teacher will appear." -- Zen proverb
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Rank: Veteran Joined: 11/4/2008 Posts: 1,289 Location: Nairobi
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How do you fund a 1.15T budget? (think am the first to use T for a trillion in Kenya - new meaning for T). I expect a shift from percentage of revenue to a charge of say tax of a shilling per minute. With telco's wars this shift cannot be implemented.
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Guys are we now saying that the only a business can grow is by charging high prices? As I have just showed, Safaricom saw turnover fall by 1.7% despite having its price because Kenyans stayed on the phone longer due to lower tariffs. Why are we missing this point? Might be why Kenya is yet to produce a world beater since this is the only place where we do the opposite of commonsense in business. They way telcos will grow their profits and compete is to source cheaper phones (I agree this is a factor in increasing mobile penetration), offer greater coverage, be innovative in terms of their product offering (Safcom is leading here by a mile). The Governor of Nyeri - 2017
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Rank: Elder Joined: 12/6/2008 Posts: 3,548
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The growth trajectory has been bent downwards, the lower tariffs have seriously dampened safcoms growth, the curve has taken some degrees to the horizontal and who knows?, the big winner "in the region" is Airtel, and it has made sure safcom and it's services do not become a threat and are contained within. A New Kenya
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Please note Safcom is owned by Vodafone. Like Barclays Kenya, it can't operate outside of Kenya because Vodafone has a sub in the neighbour countries The Governor of Nyeri - 2017
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Rank: Member Joined: 8/4/2008 Posts: 205 Location: Nairobi
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FundamentAli wrote:How do you fund a 1.15T budget? (think am the first to use T for a trillion in Kenya - new meaning for T). I expect a shift from percentage of revenue to a charge of say tax of a shilling per minute. With telco's wars this shift cannot be implemented. I listened keenly to Uhuru's speech but didn't hear about any new taxes targeting mobile airtime or did I miss it? "When the pupil is ready to learn, a teacher will appear." -- Zen proverb
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Rank: Hello Joined: 6/9/2011 Posts: 1
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Kibaki stops further drop in mobile call charges are we going to see safaricom at 6bob soon. http://bit.ly/9tXPDr
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Rank: New-farer Joined: 3/28/2011 Posts: 17 Location: Nairobi
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Howdy, Safaricom is a responsible business enterprise and it has genuine interests for its customers. It is not in our best interests to see Safaricom Make a Loss, what will thousands of dealers, airtime vendors, mpesa dealers, paybill companies do. It is good for Safaricom to make a good profit for the sake of us all. Consider that Safaricom, and in fact other big corporates and Parastatals serves as very good tax mobilixazion points for the government. Now, We do not mind a moneyed government, do we? But we regret the irresponsible expenditure and pathetic corruption. All said and done: Let Safaricom make money and i can assure you it cannot go beyond the 3/= it charges. KR, G. Above all alse, Guard thine heart with all diligence, because from it are issues of life... Prov4:23. Email: afroknight@ymail.com or domainagencies@yahoo.com
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Rank: Member Joined: 12/2/2009 Posts: 286 Location: Nairobi
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@ Wa_ithaka Revenues fell by a paltry 1.7% when you take the whole FY. When you pick H2 of 2010/1 and compare with H2 of 2009/10, the story is markedly different. A good business should not charge its customers a fee below the cost of production; and that is what Airtel is doing, in the hope they can ruin the sector and kind of benefit with susbcriber numbers before sanity prevails. That's why Kibs directive makes sense, protect the sector and all other dependent sectors on it. The laudable is more often than not rendered laughable by overclaim
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Barrywhite-voice revenue fell by Ksh3bn; data revenue rose by Ksh2.2bn. If I can pretend to be very clever for a minute. What Airtel is doing is called business. Or loss-leading in technical jargon. You do anything you can to get rivals' customers. Once you attract them, you offer them your pricier products. Apparently businesses have doing this for yrs. Look at how Google is competing with Microsoft and Apple on operating systems... The Governor of Nyeri - 2017
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Rank: New-farer Joined: 4/4/2011 Posts: 94 Location: Nairobi
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Congrats Baks! I'm sure its all in interest of Telecoms industry and Govt. How else would govt have funded its 1.5B budget?
In addition, where wud Telcos hv gotten funding for their investment in LTE, 3G, Wimax etc...
The MTR rates were definitely not sustainable!
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Rank: Member Joined: 8/4/2008 Posts: 205 Location: Nairobi
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Safcom has been inching upwards slowly, will it reach 4bob today? Wonder if investor fears have been settled slightly with Prezzo's intervention? "When the pupil is ready to learn, a teacher will appear." -- Zen proverb
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Rank: Member Joined: 8/4/2008 Posts: 205 Location: Nairobi
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Interesting article about Bharti Airtel in the Economist... Happy customers, no profits"When the pupil is ready to learn, a teacher will appear." -- Zen proverb
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Kibaki intervenes and stops mobile call charge reductions
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