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Safaricom Restructure or downsizing?
VituVingiSana
#71 Posted : Wednesday, May 18, 2011 9:57:52 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,356
Location: Nairobi
@bird_man So they want a 100% ROA? Not 100% ROE but 100% on ROA? A 100% ROA in an industry that leverages 50% = 200% ROE...

Very outsized profits!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
selah
#72 Posted : Wednesday, May 18, 2011 10:14:51 AM
Rank: Elder

Joined: 10/13/2009
Posts: 1,950
Location: in kenya
VituVingiSana wrote:
In many 'developed' countries calling rates are very, very low if you buy 1 month's service.

My cousin in USA tells me he pays $60 [all taxes included] for unlimited calls to any USA network, unlimited SMS to any USA network & 2Gbs of data!!!

Apparently in India, Airtel charges less than Rs1 [KShs 2] per minute so when we pay 3/- we are 50% higher!


These comparison does not factor in the cost of doing business.In India energy cost are lower and government is willing to offer incentives for companies venturing into rural areas secondly by reducing to that level the growth of the industry in that country is slower which has even started to affect the quality of service.

In USA the penetration rate is more than 80% compare to kenyas 50% then the cost of doing business their is also low given that the economy in most cases is predictable unlike here in kenya.

I think currently we have only one 3G operator this shows how costly it is to put up such infrastructure now how do you think this companies will break even if they were to charge the same price as established market.
'......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
VituVingiSana
#73 Posted : Wednesday, May 18, 2011 6:29:20 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,356
Location: Nairobi
@selah - I disagree!

No business environment is predictable. USA, Kenya, India, etc! Unless you have a monopoly or some other advantage, most firms in most countries have to face consumer & market forces...

No idea about energy costs in India but is energy use a huge portion of telecom costs? What percentage?

Even India just got 3G so the expansion has just started. Safaricom has an advantage over the rest! [I use Safaricom data coz even though pricier it is faster & reliable vs Airtel or Orange]

So in USA the telcos fight against each other but in Kenya the market is still open which means acquisition costs for Safaricom are LOWER than USA carriers!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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