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Chinese smartphone vendor Huawei Technologies has altered its strategic approach in Kenya in a bid to boost sales of its handsets. It has restructured the price of some of its devices and is now showcasing smartphones that are retailing at between $100-200. It is hoping that a sharp increase in sales will boost its market share in Kenya.
Huawei is currently positioned as number three in relation to market share in the African nation which has been described as a fast-growing local smart devices market. Huawei is trailing South Korean conglomerate Samsung Electronics and Tecno which is owned by Hong Kong’s Transition Holdings.
Huawei’s manager in Kenya, Derek Du said it entered the smartphone market by introducing three smart phones, but it didn’t focus on products retailing for under $200 and that costed the company long-term. In an effort to increase its market share in that segment from 4% to 15% it will overall its entire strategic approach.
Kenya’s telecommunications incumbent Safaricom enjoys a 72% market share (around 28m users) and they reported that there is now 13 million smartphones on its network, which is a significant jump from 10 million last year.
Kenya consumers have finally parted with their well-worn standard phones in favor of relatively cheap devices that offer them faster internet speed and access to applications such as WhatsApp, online banking and taxi-hailing services. According to Du, Huawei has switched its strategic focus after it became evidently clear that the average Kenyan consumer is price sensitive.
Du added: “The new focus on the lower end of the market has come about because the Kenyan consumer is price-sensitive. The $100-200 is the key part we can play. If we can bring it up, it means we will also bring up the whole market share.”
He believes that change will enable Huawei to boost its overall market share to around 25-30%, from the current 14% it has been rooted on for the last two years. Research has revealed that the average Kenyan worker earns an annual wage of $1,200, which subsequently means that most people can’t afford expensive smartphones.
Huawei’s previous approach centered on their mid-range smartphones were it enjoys a 30% market share. Huawei has enjoyed a successful twelve months globally, and the Chinese conglomerate, based in Shenzhen, is now seen as a real threat to the smartphone monopoly which is dominated by Samsung and Apple.
Huawei’s African boss said that the Kenyan economy was enjoying a resurgent comeback after a difficult number of years, and is in a stable position. This makes it an attractable market for investors, and du has reiterated its commitment to growing its business in Kenya.
The United Nations (UN) Environment Program, an agency that coordinates the UN’s environment activities, recently signed a Memorandum of Understanding (MoU) with Safaricom, Kenya’s largest telecommunications provider, aimed at heightening the implementation of Sustainable Development Goals (SDGs), which focus on protecting and conserving the environment.
UN Environment has urged Kenya’s private sector to collaborate with them in implementation of the SDGs that will help curb climate change. The 17 SDGs cover areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities. The goals are interconnected – often the key to success on one will involve tackling issues more commonly associated with another.
Currently, UN Environment is working closely with the private sector through various initiatives, such as the Finance Initiative, which works with over 200 institutions to bring systemic change in global finance for sustainability.
“The private sector, whether a small store or a major conglomerate, must be given a place at the heart of our work,” said Erik Solheim, head of UN Environment, speaking during the MoU signing between Safaricom and UN Environment. “Its energy and its innovations will shape the success or failure of our common goals: to build a more inclusive, resilient and sustainable world. No organization, not even the United Nations, can do this alone.”
Bob Collymore, CEO of Safaricom, said, “As a purpose driven organization, we realize that it is important to use the SDGs as a lens through which we can do business while ensuring that we are also creating the basis for tangible change for our communities. Over the last few months we began the journey of adopting and integrating the SDGs in a way that made sense for the various divisions in our business.”
The MoU will provide a framework of cooperation and understanding, and facilitate collaboration and implementation of activities and projects that contribute to selected areas of the SDGs. The selected SDGs include Affordable and Clean Energy, Sustainable Cities and Communities, Responsible Consumption and Production, Climate Action, Life Below Water, and Partnerships.
Kenya’s Safaricom, the African nation’s leading network operator, said it’s working with Huawei to deploy a fiber-to-the-home (FTTH) network. Safaricom will use the Chinese telecom equipment manufacturer’s end-to-end (E2E) FTTH solution to rapidly deploy the FTTH network and expand its capability to new home broadband services.
Kenya has a steadily developing economy, but its fixed broadband penetration rate is lower than 1 percent, failing to meet the network requirements of home and enterprise users. Safaricom plans to enter the home broadband market, but it faces many challenges, including scattered user distribution, high network construction costs, and low early phase service provisioning rates and revenues.
For precise investment, based on the idea of value-oriented network construction, Safaricom uses analytics to determine network rollout in line with customer demand as its first step. And then, Safaricom deploys Huawei's E2E FTTH solution to achieve efficient network construction and operation.
For fast network construction, through infrastructure synergy and engineering innovation, Safaricom can fully utilize existing metropolitan area network (MAN) optical cables and preferentially use aerial cables.
Through the synergy of fixed broadband optical distribution networks (ODNs) and mobile backhaul networks, Safaricom can deploy mini optical line terminals (OLTs) and wireless base stations in the same cabinet, realizing fast deployment and centralized home access, and greatly decreasing network construction costs.
In terms of efficient operation, Huawei's lightweight mini operations support system (OSS) helps Safaricom to reduce the system integration period and complete deployment within only three months, down from 18 months.
Huawei also provides a smartphone app that integrates installation, maintenance, and operations, supporting on-site service provisioning and acceptance, shortening service provisioning period from two weeks to less than 48 hours, and doubling installation rates.
"By using Huawei's E2E FTTH solution, we can quickly build the FTTH network,” said Thibuad Rerolle, Safaricom's Director. “We are keen to broaden the development space for new fixed broadband services."
Jeff Wang, President of Huawei's Access Network Product Line, added, "Emerging markets place strong demands on FTTH network services. The top challenge that operators face is shortening the ROI period. To solve this challenge, Huawei released the E2E FTTH solution. It features precise investment, fast network construction, quick service provisioning, and efficient O&M, enabling operators to greatly shorten the ROI period and achieve business success."
South Africa’s Vodacom Group, part of Vodafone, recently announced that its proposed R35 billion (around US$2.6 billion) acquisition of an effective 35 percent stake in Safaricom, has been finalized. All regulatory approvals and conditions precedent in both Kenya and South Africa have now been met.
Vodacom Group, part of Vodafone, announced that its proposed R35 billion (around US$2.6 billion) acquisition of an effective 35% stake in Kenya’s leading integrated communications company, Safaricom, has been finalized. All regulatory approvals and conditions precedent in both Kenya and South Africa have now been met.
At a General Meeting held on 18 July 2017, shareholders overwhelmingly approved the proposed acquisition by Vodacom of an indirect interest of 34.94% in Safaricom Limited and the issue of 233 459 781 new ordinary shares in the company to Vodafone. The allotment and issue of 233 459 781 new ordinary shares to Vodafone took effect on August 7, as well as the listing of these shares on the Johannesburg Stock Exchange (JSE).
“Vodacom is pleased to announce that the Safaricom transaction, which is the largest in our company’s history, has now been finalized,” said Vodacom Group Chief Financial Officer Till Streichert, commenting on the conclusion of the transaction.
“This will provide both businesses with opportunities for growth, as well as enable Vodacom shareholders to access a strong performing business in East Africa in a high growth market. We expect this transformational transaction will enhance our position as a leading African mobile communications company, providing the Group with the perfect opportunity to diversify our financial profile.”
Vodafone Group announced that its wholly-owned subsidiary, Vodafone International Holdings B.V. (“Vodafone”), has agreed to transfer part of its indirect shareholding in Safaricom Limited (“Safaricom”) to Vodacom Group Limited (“Vodacom”), its sub-Saharan African subsidiary. Based on the agreed terms of the transaction, Vodafone will be exchanging a 35% indirect interest in Safaricom for 226.8 million new ordinary Vodacom shares.
The transaction, which has a value of €2,361 million based on Vodacom’s closing share price on Friday 12 May 2017, will increase Vodafone’s ownership in Vodacom from 65% to 70%. Vodafone will continue to hold a 5% indirect interest in Safaricom following the transfer, in addition to the indirect interest held through Vodacom.
As part of the transaction, Vodafone Group has given appropriate assurances to the Government of Kenya to ensure the ongoing success of the long standing partnership between Safaricom, the wider Vodafone Group and the Government of Kenya.
The transaction is expected to generate clear benefits for Safaricom, Vodacom and Vodafone Group: Vodafone Group streamlines and simplifies the management of its sub-Saharan African holdings; strengthens alignment and cooperation between Safaricom and Vodacom and provides greater scope to share talent and expertise across the region as well as internationally; and Vodacom gains exposure to the attractive Kenyan market and one of the most successful and innovative telecoms companies in Africa, further enhancing its investment case and strategic position.
Completion of the transaction is subject to a number of conditions, including approvals from Vodacom minority shareholders, approval from the Financial Surveillance Department of the South African Reserve Bank and confirmation from the Kenya Capital Markets Authority that the Transaction does not trigger an obligation for Vodacom to make a mandatory bid for Safaricom.
A committee of Vodacom’s independent non-executive directors has unanimously approved the transaction. Vodacom has appointed an independent expert, Deloitte & Touche to provide a fairness opinion on the proposed transaction which will be included in the circular to be distributed to Vodacom shareholders on or about 5 July 2017 with the general meeting to approve the re-organization expected to take place on or about 15 August 2017. The transaction is expected to close in the third quarter of the 2017 calendar year.
Safaricom, the largest integrated telecommunication service provider in East Africa, is improving services for more than 25 million subscribers in Kenya, thanks to Nokia's Customer Experience Management on Demand.
With help from Nokia, Safaricom now uses big data technology to derive real time insights from network, customer and revenue touch-points. With the insights, Safaricom is better able to provide proactive customer care, resolve network issues and prioritize capital expenditures. Safaricom uses Nokia CEM on Demand to derive insights on voice, SMS and M-PESA traffic, processing 214 billion data points per day. The team is currently adding mobile data capabilities.
Bhaskar Gorti, president of Applications and Analytics at Nokia, said: "Safaricom has been a Nokia customer for more than 15 years and it consistently has been an innovative operator on the forefront of trends. By selecting CEM on Demand, Safaricom is demonstrating once more that its main concern is providing its subscribers the best possible service in East Africa."
Nokia CEM on Demand allows Safaricom to collect every customer's network experience from network probes and is integrated to other internal systems including financial, customer data warehouse, Customer Relationship Management and M-PESA. The insights are actively used by Safaricom's technology, customer care, finance, marketing, sales, and strategy teams. The solution was deployed within 12 months with a pilot up and running in the first six months in the western region of Kenya.
By using Nokia CEM on Demand, Safaricom has reduced the time it takes to: Retrieve subscriber records for customer care from 2-6 hours to 15 minutes; obtain customer satisfaction scores for the entire network from 30 days to near real-time; determine root causes for service degradation from 24 hours to 10 minutes; and ensure network-related issues are put into context with a real time understanding of the customers impact and their value to Safaricom.
Bob Collymore, CEO, Safaricom, said: "We differentiate Safaricom with our customer-centric approach, so our investments in CEM are important. With Nokia CEM on Demand, we now have one customer experience management solution for the company. We can resolve issues before they impact subscribers. We can give individual customers a personal touch and make our constant quality of service improvements visible."