It’s a high calling but we're hopeful we will see Kibati's epiphany

In the next week, the new broom at Telkom Kenya, CEO Mugo Kibati, will be 60 days in office. Telkom announced Kibati’s appointment on November 9 in what was hoped to be a game changer in the two-decade-old struggle by the telco to break to the surface and get a hold of competitive edge in the local market dominated by Safaricom.

The Kenyan telco space is fascinating for business leaders, academicians and commentators with interest in the fields of business, economics, marketing and innovation not least because of how it has evolved in the past two decades.

PUNISHING SUCCESS

To recap it, Safaricom began as a department at Telkom (then Kenya Posts and Telecommunications Corporation, KP&TC). Analysts then rooted for KenCell, the precursor to Airtel, mainly because an incoming private firm was expected to apply the type of agility associated with young companies as opposed to the government bureaucracy prevalent with Safaricom’s parent company.

It’s now water under the bridge that Safaricom pulled up an unexpected sterling success story to be above its rivals, a feat it has repeated with relish every year.

Fast-forward to 2015 and the grumbling about dominance by Safaricom began to emerge in earnest, prompting Communications Authority of Kenya (CA) to retain a consultant to study the market and establish whether corrective measures were necessary. The regulator received the report and formally published its contents this year but has not moved to state clearly the next course of action.

Airtel and Telkom have supported a range of those recommendations which would effectively force Safaricom, in some form or shape, to share the pie, on the basis that the market is too skewed for them to compete effectively in voice, SMS, data or mobile money and associated services. The consultants went as far as proposing the splitting of Safaricom, which the government has objected.

Safaricom struck right back, arguing that it would be wrong to punish success by adopting such recommendations; that it would send the wrong signal to investors (given that Safaricom is as big as the next 10 companies listed on the Nairobi bourse); that it would kill innovation as it removes the incentive to create products and services; and that it just doesn’t make economic sense.

UNIQUE MODEL

Some Kenya-centric analysts have gone further and proposed that Safaricom sits in comfort zone. They argue that, viewed against Airtel global, it’s nothing but a dwarf that should be fighting hard to spread its world-famous innovations across Africa. I believe this should be the case for Kenyan companies, where we must see beyond Nairobi and spread out innovation and entrepreneurial energy far and wide. The globe is the canvas.

Which brings me back to Mr Kibati. I, quite honestly, expected that Mr Kibati’s arrival at Telkom Kenya would be a breath of fresh air. I hoped, and still do, that Mr Kibati will reorganise the telco into a formidable company with the capabilities to offer innovative and competitive products and services in a highly dynamic industry.

I expect him to be forward-looking: To offer this market some ground-breaking model and not merely a new edition of the book "How to Break Up Safaricom and Other Stories". The innovation we hope to see is that which will make a much-needed mark in the job creation space, which this economy badly needs.

It was reported last week, in this newspaper, that Mr Kibati would like to see commercial interoperability between different mobile money agents. He gave the example of how banks do it. But I beg to state that he misses the point if he were to use banks as an example. He knows pretty well that every bank in this market works as a distinct brand with a unique business model to boot.

HIGH CALLING

That a Barclays (now rebranded ABSA Kenya) customer can withdraw cash from a KCB ATM does not mean the two banks share anything — save the innovation that drives convenience to their respective customers. They offer differentiated, competing services and products under different roofs.

It has recently been reported that Telkom has sold its towers to an American firm so that it can lease them back. That makes great business sense, in my view, because the move should free up cash that the telco can use to pursue its business interests.

We shall be waiting to see what Mr Kibati can work with banks to offer; what he can do with the very young, fixed wireless network and the other opportunities that undoubtedly exist. It’s a high calling but the book we are waiting to read is "Kibati’s Business Epiphany".

Dr Nyabuga is a senior lecturer at the University of Nairobi’s School of Journalism and Mass Communication.