Big oil-producing countries have faced a double-hit in recent months: the sudden drop in prices of oil and the economic impact of the global pandemic. In the case of Angola, which entered both crises with an already weakened economy, how are its prospects looking? The Africa Report speaks to Sergio Pugliese, the Executive President for the African Energy Chamber (AEC), to find out.
Telecoms: Race to the top and bottom
Mobile operators are competing to expand network coverage while engaging in new price wars, offering the latest services as customers are finally able to switch providers with greater ease
Read more on tourism and infrastructure in our Country Focus on Kenya.
As the dust begins to settle after an assault on prices in 2010, Kenyan mobile-users are sitting pretty. Already in one of the most sophisticated and competitive telecoms markets in Africa, they could soon be basking in the unusual glow of better customer service.
Choice will be its driver. A gentleman’s agreement reached in December by the country’s four mobile operators means that 1 April will bring the introduction of number portability. For KSh170 ($2), subscribers will be able to switch networks without losing their number. Operators will need to keep their subscribers happy or wave goodbye.
For challengers to Vodafone-backed Safaricom, which dominates with 80% of the market share, it is a vital concession. Orange Kenya, 51% of which is owned by France Telecom, has invested €2m ($2.6m) in the technology needed to manage the transfers. “People are demanding,” said Mickael Ghossein, its chief executive. “To win against Safaricom you have to have a very good network with very good services.”?
When Bob Collymore took over from Michael Joseph as chief executive of Safaricom in November, he said network quality and customer care would be his short- and medium-term focus. Soon after, Safaricom reacted with indignation to news that it had failed five out of eight parameters in the the Communications Commission of Kenya’s (CCK) first-ever quality of service survey. Airtel Kenya, the rebranded operations of Indian firm Bharti, which bought Zain’s Africa assets in March 2010, came out on top.
The dilemma for operators will be how to maintain good services on tighter budgets as their balance sheets feel the impact of the price war. In August last year, the CCK announced a 50% cut to interconnection rates (the cost operators are charged for terminating calls on another network). Rates will fall progressively from KSh4.42/min to KSh0.86 by 2014. However, the impact was felt immediately, with Airtel using Kenya to test out its mass-market strategy by cutting call prices by 50% and SMS prices by 80%. The other operators had no choice but to follow suit.
The threat of losing their M-Pesa mobile money account could be enough to keep customers with Safaricom – with 13.5m subscribers in September, M-Pesa has become Kenya’s proxy currency. Its competitors have their own offerings. Orange followed the lead of Safaricom’s M-Kesho service by partnering with Equity Bank to offer accounts to Orange Money users. Bharti Airtel has rebranded the Zap service it inherited as Airtel Money, while Essar’s Yu launched YuCash in December 2009.
As the smartphone market expands, the race is on to roll out 3G networks as fast as possible. Safaricom launched 3G services in 2008 and has continued to build base stations, pulling in KSh8.5bn, or 20% of its revenue, from data services in the second half of last year. Airtel and Orange told The Africa Report that they would launch 3G services in the first half of this year. Pushing further ahead with 4G technology, Safaricom is already rolling out long-range, WiMAX base stations and testing Long Term Evolution broadband.
As subscriber numbers in emerging markets continue to grow, so is the business of targeting them. A growing application industry is already creating content for these mobile data users (see “Nairobi 2.0” in issue 26). Now BuzzCity Mobile, an advertising company, has ranked Kenya fifth in its global index of mobile advertising. Between July and September, mobile advertising in Kenya grew 116% to 506m impressions. Although these figures only represent ad banners served through BuzzCity’s network, they reflect the race forward in emerging markets. BrandKey Marketing, a Kenyan firm that already runs a ringtone and information service called MobilePoa, launched an opt-in mobile advertising service called Eyeballs in May 2010.