Has Safaricom fallen out with the Government?

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Yes ,is there cold war between Safaricom and the Government .That is  a big question and I don’t want conspiracy theorists here….so let us look at it purely on business perspective.  Media is reporting that Safaricom might lose their license if they don’t meet the new demands by The Communications Commission of Kenya (CCK). CCK held a public press conference to announce that Safaricom has to pay $27 million (Sh2.3 billion) for the license renewal and that the license will only be renewed after Safaricom meet the service standards set by the CCK.

“I wish to reiterate that the renewal of Safaricom’s licence for a further terms of 10 years shall be subject by to an upfront payment of renewal fee of $27 million,” said Francis Wangusi, the director general of the CCK at a press conference.

“The renewal shall be dependent of Safaricom’s commitment to adhere to the set minimum quality of service standards by June 30 2014.”

First let me state something which I think is obvious, it is unthinkable that the most profitable company in East and Central Africa will be denied the license. Safaricom is everything in Telecommunication sector …with Customer base of 19.4 Million Kenyans. They paid Khs.7.91 Billion tax to the Government in their last financial year. And since the other operators are making losses, I guess it is the only cash the government is getting from operators in terms of corporate taxes. On top of that the country smart itself about mobile innovation which is basically one thing and one thing only …Mpesa

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It is important to note at this point that Kenyans for a long time have been calling for better quality from the telcos across the board. It is the duty of CCK , as the industry regulator to ensure that the standards are met at all time. But for some weird unknown reasons CCK have not been doing their job well. Meeting standards all the time means ongoing process and those who fail to meet standards are penalized in one way or the other. Tying the standards on the license renewal is well and good but since these standards are not stagnant such that when they are met at the renewal stage they will stay the same for the next 10 or so years, there should be a way that the rules are enforced on daily basis.

Having said that, I don’t think it was necessary for the CCK to hold a press conference to announce that Safaricom might lose their license, which we know will not happen. They should have just written to Safaricom about it and lay down all the conditions, unless there was something else to be achieved by that. Whatever the case, I don’t think that was the best way to do it. Anyway, CCK has now put themselves on the spot and come next year…they will have to make the Big Decision or at least explain themselves to the public

I am not saying that Safaricom will not meet the standards but having talked to Nzioka Waita sometime back about the quality of the network, I understand the challenges facing Safaricom. They have a fast growing network, meaning at every level, they have to improve the network to meet the new and increasing demand. The other operators with few people on their network can easily maintain their quality within a given range of investment.

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And then I am also wondering why the other operators have not taken advantage of the Safaricom network issue , if it is true that they have not met the service quality standards in the last three years. You could  ask yourself over and over again why subscribers stick with Safaricom…. And the answer is simple, the other Subscribers might talk of better network quality but their customer service are horrible. I have seen people say they are tired of Safaricom, they would move to the other networks but after a few weeks, they are back to the good old Safaricom. The recurring reason given is that if you have problem, it will take ages to get help as compared to Safaricom.  Sometime back Safaricom discovered that they can help people through twitter and it has been one of their best customer care service centers since.  At the same time it is easy and faster to call them these days as opposed to what used to be there before

Back to CCK issue..Safaricom can easily game the system or CCK next year if they want. They could basically invest to improve the quality up to that time and go back to business as usual after they get the license renewed. That is why I feel that there should be some penalties for the Operator which does not meet set service quality standards assessed quarterly or something like that. CCK should not wait ten to fifteen years to enforce the quality within the industry.


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