Say you buy a database today from Oracle to run on Oracle Hardware, as an organization of Safaricom's size you need support - basically an SLA from Oracle on the Hardware and Software. Why an SLA? Because if said database is running your billing system and it goes down and you are unable to figure it out, well, you lose revenue. A lot of revenue. Normally support and subscription costs for hardware/software come to roughly 30% of the value spent on the hardware. Same thing with base stations, you have to get the manufacturer to support once the product has been sold. Similar model. All these costs are in USD. What happens when the dollar fluctuates - these costs spike because local telcos collects their revenue in KES, not USD. So it becomes more expensive to maintain the same infrastructure. 

Now - think about the guys who are probably most affected - Airtel. They were already on razor thin margins, outsourced infrastructure fully to NSN (I think), outsourced IT fully to IBM. Those are their largest expenses, suddenly going up... Customer spending is not accelerating at the same level.. Airtel has already been forced to increase call rates in India...  http://www.telecomlead.com/inner-page-details.php?id=1736

On Mon, Sep 12, 2011 at 9:49 AM, Nish <pnishus@gmail.com> wrote:
I don't get one thing: So they make capital investments in the same
breadth as operational costs? how do you offset a capital investment
like that or are you saying those assets are consumables and why? I
don't follow the argument yet. explain.

On Fri, Sep 9, 2011 at 7:16 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
> Until Kenya starts manufacturing its own equipment (telco or otherwise) we will be at the mercy of foreign currency flactuation...
> -kaboro-
>
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--
With Regards,

Phares Kariuki

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