There is a debate that has been going for a while on whether Safaricom is actually a dominant player in Kenya’s telecommunications sector.
Those accusing the Telco of unfair dominance are quick to cite its disproportionately high numbers of subscribers and bulging market share forgetting that Airtel (initially Kencell), which has been touted as the greatest ‘victim’ of the alleged dominance, started operations at the same time as the Vodafone-affiliated player.
I don’t think disproportionately higher customer numbers are an irrefutable pointer to one player being dominant over its competitors. In my observed opinion, having been one of the early crop of Kenyans to subscribe to a mobile provider at the turn of this century, Airtel is a victim of its own circumstances.
Consider these ten largely unspoken strategic blunders that have haunted Airtel and her antecedent entities:
- Mistake 1 – Target Market Misjudged
When both Telcos started operations, Kencell, which was partly owned by Vivendi of France, largely targeted the upmarket community. It was much easier to find the telco’s services and airtime being peddled in posh, sparsely populated locations. Contrariwise, Safaricom sim card agents and airtime salesmen milled with the masses – around matatu termini, in the suburbs, informal settlements, everywhere. Safaricom gradually started pulling away from Airtel.
- Mistake 2: Agents’ Commissions
Telco providers partnered with retail outlets, shop owners, pharmacies and the like to reach the masses. It was common for these shops to stock upon and sell both Safaricom and Kencell lines. However, Safaricom paid a fatter commission to the agents for every line sold. Thus, naturally, the agents convinced anyone who wanted connectivity to join the Safaricom bandwagon. And because calls were expensive then, more so across the different networks, everyone wanted to subscribe to the same network their loved ones, siblings and business associates had signed up to.
- Mistake 3: Per Second Billing
Safaricom charged subscribers on per second basis. Kencell charged per minute. This made a huge difference at a time when the cost of calls was dear. Rival ads from Safaricom and Kencell raged in the media, each trying to prove why their billing method was the best. What was obvious, however, was that with the high voice call tariffs, per second billing made much economic sense, particularly to the masses. So Safaricom won. Meanwhile, Kencell was so beleaguered by Safaricom in the media campaign that the former subsequently replaced their per-minute billing equipment.
- Mistake 4: French Management at Kencell
France’s Vivendi saddled top leadership positions in Kencell with clueless, condescending French managers, who had scant understanding of local market behaviour and hardly consulted. The result was that Kencell’s marketing strategies were not incongruent to the market’s adoption inclinations.
- Mistake 5: Kencell Rebrands to Celtel
The French abandoned ship and Vivendi sold their stake to Celtel. The result? Kencell rebranded to Celtel. A significant portion of Kencell’s clientele, particularly upcountry, could have been forgiven for thinking that Kencell was no more. Days after the changeover, airtime agents struggled to convince Celtel subscribers that Kencell-branded recharge cards worked. It would be naïve to imagine that the rebranding did not occasion subscriber attrition.
- Mistake 6: Safaricom Delights
As Celtel was bogged down by the challenges that came with rebranding, Safaricom was busy doling out value-add services. If it wasn’t 191Direct, it was Please Call Me or Sambaza Airtime. Still, MPESA was yet to come.
- Mistake 7: Celtel Rebrands, Again, To Zain
Celtel globally decided to cease investments in the telco sector. So Zain of Kuwait bought them out. The attendant changes in strategy and working culture undermined innovation at the Telco. Moreover, subscribers became even more muddled by the changes.
- Mistake 8: Zain Outsources Customer Service
The worst mistake any service company – be it an airline, insurer or telco, can do, it is to outsource customer service. Yet this is what Zain did. The BPO company that took over the customer service function had an interesting compensation package. Curiously, the shorter the duration of the subscriber calls it handled, the more it earned. Guess what happened as a result?
Naturally, the customer care agents rushed the calls, were poor listeners and showed little empathy to subscriber woes. Customer satisfaction levels plummeted and lots of exasperated subscribers dumped the telco. Little wonder that not too long afterwards, Zain wanted out.
- Mistake 9: Zain Rebrands To Airtel
Need I say more? Airtel inherited a derelict Telco. The current owners have done little to shore up customer satisfaction and trust. The billing system and subscribers have questioned the integrity of their billing system.
I do not buy the argument that ascribes Airtel’s woes to a large extent on Safaricom being a dominant player. The adventure of the former has been replete with too many tactical mistakes for it to have become formidable.
In my view, the greatest challenge for Airtel right now is to restore trust and improve on her customer service. This is far more important than attempting to charm its few remaining subscribers with new innovative solutions.
Fredrick Kariuki is a technology, geopolitics and history enthusiast. The views posted here are his own. You can follow him on twitter at @fkariuki
