ICTworks by Inveneo

Russel Southwood interviewed Safaricom’s new CEO, Bob Collymore, on their business plans in Kenya. While the interview covered many topics (read the full interview), there was one quote that was quite shocking for those focused on bringing ICT to rural areas:

"We have 77% of the market by subscriber numbers. Our ARPU is higher than anyone else's. But 77% market share is not sustainable. We do have 'significant market power' but we feel that's because everyone else was very incompetent. There was no consistent management at the number two operator. We're OK with losing market share (faced with unrealistically low rates) and focusing on Nairobi and high-income communities. The people in remote districts are receiving calls (more than making them). If rates decline, why should I continue to do that?"

This seems to indicate that Safaricom is willing to abandon its market share, and subscribes, in rural areas - any place that is not a "high-income community". Watch the full interview video and let me know your thoughts:

When Russel Southwood of Balancing Act, interviewed Ken Njoroge, CEO of Cellulant, on mobile phone music downloads, I was expecting a general overview of the musical tastes of Kenyans. How wrong was I!

In his telling interview, Ken Njoroge revealed that music downloads via mobile phones is a $4 million dollar Internet business opportunity:

Lipuka: a mobile music money maker

Q: So how many monthly music downloads are you dealing with?

A: It fluctuates depending on marketing activity but in a typical good month we get somewhere between 300,000-400,000. A successful artist might have 200,000-300,000 downloads over 3 months.

Q: What’s the cost of downloading a track?

A: In Kenya it ranges from KS50-70 (US64-89 cents) and in Nigeria it’s about the same at around N100 a track (US66 cents).

Q: Who gets what out of that?

A: First, the Government takes 26% in taxes. After that, the operator generally takes 50-60% and we pay 10-12% to the artist in royalties. Prices across the countries we operate in are broadly similar.

Now let us do the math to see where the money is. First, 400,000 downloads at KS70 gives us 28,000,000 Kenya Shillings per month in gross revenue (or about $4 million USD annually).

Now with the calculation to the right, we get 2.5 million Kenya Shillings in net revenues each month. Not bad for an Internet business, eh?

Especially when you realize that Ken feels that he's only reached a tiny fraction of the 7 million buyers across Kenya, Tanzania, Nigeria, Ghana, Zambia, Botswana and Malawi where Cellulant operates.

In addition, Ken estimates that 20-30% of that total market have media capable handsets - today. As that percentage grows, so will revenue opportunities with multimedia savvy Internet consumers who see their mobile phone as a mainstream music distribution channel.

I can't wait to see what will happen when Ken & Cellulant take on the video download business at Wuse market. Movies will be a whole other business opportunity for him.... or for you!

Russell Southwood of Balancing Act has a new report out on bandwidth in Africa, and "African Fibre and Satellite Markets" is a pretty grim assessment of satellite's future on the continent.

Satellite service in decline

The overall balance of satellite vs fibre use in Africa’s top Sub-Saharan markets 20 markets goes from 45.6% vs 54.4% in 2008 to 11.9% to 88.1% in 2014. Of these top 20 markets, the top 5 markets (South Africa, Nigeria, Kenya, Angola and Sudan) make up the majority of bandwidth demand across the continent and are the countries that will experience the fastest bandwidth growth over the period.

So satellite operators and resellers will not only be selling into a smaller share of the overall bandwidth market but will become niche players in many countries. There will be growth but most of it will be on fibre.

Satellite operators need to demonstrate that they can respond to these new market circumstances by transforming what they offer. Satellite is dead! Long live satellite!

Firstly, they need to make innovations in terms of delivery. Secondly, they need to find ways of bringing costs down so that those who are beyond fibre or wireless have some chance of joining the party. The market needs satellite broadband offers in the US$20-40 per month range.

Maybe the big transition from satellite to fibre will re-energise the operators and get them thinking harder about how they retain market share.

Read more details on the report or you can purchase the report.