Skunk(ette)s,

He came, we saw and we heard and it was good.

It wasn’t raw and edgy but it was really insightful and eye/ear popping.

Here are a few snippets:

MJ Says:

“INHERITED TELKOM INFRastructure.

Old and almost useless network switch  was in extelkoms house.

Zain started in feb then launched in august in august 2000 but safaricom had been operational for some years and had a staff of 55 that he had to inherit.

5  new hires and 55 old safcom staff from tkl in norfolk towers flat

mj is an engineer

vodafone inv 20mill usd  ata time when one switch was 10mill usd

Went with prepaid billing system because they couldn’t afford a postpaid platform, in hindsight a good decision. The prepaid billing platform was only 200kUSD

Billed per sec when per minute would have made more sense, gut instinct made MJ choose per second billing even though he needed the 25% extra revenues that come from having a per Minute billing. A good gut decision in hindsight though at that moment it was thought to be a mistake to go per second.

He decided to hire 200 fresh out of campus to provide free customer service- turned out to be a good decision as most people would not read any manuals or handouts. They fielded as many calls about the then Kencell as they did about their own service.

Bought low cost Motorola phones to start and it was almost a disaster as they were overcharged and the service was low on the Moto end.

Launched on Oct 23rd 2000. On Monday following the network collapsed due to an mimproperly configured database.

In june 2001 overtook kencell in market share. Needed to borrow more money. Paperwork took a whole year to get the money. Shareholders wouldn’t sign guarantees so the network was its own security guarantee.

Continued aggressive selling but lacked capacity to expand the network while waiting for funds. This led to congestion.

 Switch was paid and installed in 10 days.

Huge mistake:

· Awarded the loyal customers with a 200KES giveaway but due to Dial UP from Dubai it went horribly wrong and people were up at 3am calling and congesting the network for a whole 5 days network was super congested. Lessons learned: do not surprise your customers and Use local based companies as far as possible.

· Free calls after 9pm- another congestion causing fiasco starting at 9.01 pm.

Safaricom has an R&D development team of over 40 members and a web portal for ideas submission. Most of the local hits are not originally kenyan ideas. Sambaza originated in  Egypt and Sudan.

Mpesa was uk developed and coded by vodafone and rolled out in kenya on a test basis as a proof of concept. This was done in Thika  first as a microfinance loan payback method but quickly expanded into its present role. Support servers are based in UK and Frankfurt Germany.

Reached one million in 2003, 2mill 2004 and 16.5 million currently and growing by  half a million every month. Revenue is down by upto 40 %.

BTSs must payback max of 1yr or in 6 months unless they are wrongly placed or are microwave only sites. Site by site revenue is reviewed every six months in terms of originating and terminating revenue.

 Safaricom has  60 green sites. Looking at new ways of cooling the batteries by burying them as this is 25% of cost of running a BTS.  Originated revenue as well as terminated revenue are used to evaluate a BTS location. 2600 base stations total and growing.. Physical maintenance is outsourced.  5000 generators in the network to power the BTS. Remote sites have high vandalism and security is a high concern as they all cannot be manned sites.

Michael Joseph says

 "Revenue share: safcom shud get the majority of the revenue share. Our customer. Our distribution costs. Our infrastructure. We stand to lose the most and gain the least in case you are not successfull. Therefore we will have a great and better share of the revenue. In the case of Skiza, we didnt believe the model will work therefore we gave them a whole lions share of revenue but they had to invest all their own funds and simply ride on our network. they are a great success and a good example of where revenue share favours the other party."

"Mpesa is launching pay at the till at Uchumi supermarkets on Friday 22nd October. Retail banking is going to be a dinosaur in 10 years time. MPesa is now the biggest form of paying school fees. Orange money, YU cash and zap are thinking its about money but in truth it is all about providing a service and profit will come in at its own time."

Average kenyan calls only 3.2 people so friends and family circle is limited to 3.2. friends and family tariff will not work here hence the tactical withdrawal of the tariff quietly by Orange.This is one way orange made a huge mistake.

You must have a measured and tactile response to disruptive tactics and that is why safaricom is slow and measured in responding to the Price wars as they are playing out.

”

When the righteous Prosper, The City rejoices but when the wicked perish there are shouts of JOY