The new chief executive at Kenya’s largest mobile telecoms company faces a tough task as low-cost Indian competitors punch – as he sees it – below the belt Bob Collymore, the man to replace Michael Joseph at the controls of Kenya’s largest telecoms operator, Safaricom, has not had it easy. There has been the strategic shake-up of personnel: in a bid to slim the top tier, out go chief technical officer John Barorot and chief information officer Robert Mugo.
He is also introducing the intriguingly named ‘Customer Delight Index’ and devolving customer happiness to middle management, a step away from the concentration of decision-making under the previous chief executive.
But his toughest challenge has undoubtedly been the arrival of highly aggressive Indian-owned competitors. With the purchase of Safaricom’s biggest rivals, Zain, Bharti Airtel has transformed the landscape. Collymore has not welcomed the change of Zain from high-end competitor on service into a broad-based competitor on price. “This is not competition! This is the destruction of value,” complained Collymore on Kenyan business television NTV, adding that the Indian company was using Kenya as a platform to test their business model of ignoring profitability in search of growing their customer base, labelling it “morally reprehensible”.
If that wasn’t enough to bring on the grey hairs, another Indian company, Essar, launched in December 2008 with the Yu brand, and although they are still small, they risk jumping on the low-cost bandwagon in order to catch up. With the arrival of number-portability – which gives consumers the opportunity to use different operators while still holding on to their original phone number – it is now much easier for Kenyans to take advantage of these new entrants.
The strength of the M-PESA money-transfer technology should stop too many people from stampeding for the exit. It has been so popular that Safaricom has been forced into a systems upgrade because of the volume of traffic. The new version, M-KESHO, gives customers an account with Equity Bank, another ‘sticky’ factor to retain business. They are also thinking about launching a debit card, linked to the money-transfer scheme.
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