Econet talking in high volume

September 4, 2008
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, NAIROBI, September 4 – “Walk around any of the major cities in India and you see people with their mobile phones always on their ear. They consume many more minutes than we do in Africa because it’s a different approach to the business- very low cost of operation, very high volumes and very low pricing.” 

That analogy, coming from the man spearheading the launch of Kenya’s third mobile phone operator, speaks volumes. 

Michael Foley, the Chief Executive Officer of Econet Wireless Kenya, is promising a revolution to the way we know the mobile telephony market, and no! Not on postponing rollouts and seeking extension of deadlines. 

Going by his words, the “peculiar” Indian calling habits described above are soon to be introduced to Kenya as part of a strategy that would be focused on product variety, pricing and the distribution network by the firm. 

“We are Wal-Mart (the American retail chain). We are not Macy’s in downtown New York. Wal-Mart have excellent customer service, they offer a great variety of products, they work on volumes and selection, and all these at lower prices,” he says. 

The Indian conglomerate Essar Group, which bought into Econet Wireless International -thereby owning a substantial stake in the Kenyan company – brings to the market a very well oiled war-chest; they have already announced plans to invest Sh32 billion in the next two years. 

They also bring in extensive experience in mobile telephony; one of Essar Group’s subsidiaries operates a 50-million-subscriber network in India in partnership with Vodafone (which incidentally owns Safaricom). 

Foley says Econet Kenya will adopt two key business models that are already existent in India, the first one being a highly volume-driven operation.  

The second is site-sharing. 

“Site-sharing is an ingrained part of the industry in India. Essar owns such a firm (Essar Telecom Infrastructure Private Limited. Operating in this model lowers costs for the companies,” he explains. 

Already, negotiations are underway for the sharing of base station sites with one of the existing competitors and Foley says they are confident of clinching a deal. They also plan to build more sites across the country by mid next year. 

“We have a very aggressive network build-up plan,” says Foley, who maintains that Econet is on course to a November launch, after postponing twice in June and September this year. 

“Is it gonna be perfect when we launch? Absolutely, positively not! We will be very good, but not perfect; we have to manage our expectations.” 

Many mobile users have eagerly waited the entry of a third operator hoping the increased competition would reduce charges, which even Foley admits are too high. 

He says pricing would be their key focus, but insists that it would not be the key fundamental for their success. 

“If you do only pricing you will fail!” he states matter-of-factly. “Targeting lower prices without focusing on quality of service is a monumental lack of imagination and it will not meet the needs of the client. If your service is terrible, clients will not pay for it, whatever price you provide.” 

The Econet business model also promises to capitalise on out-sourcing non-core functions including sales and distribution. Customer care operations will be handled by another Essar Group company, Aegis, which is setting up a business process outsourcing base in Kenya.” 

“What we can then do is focus – like a laser beam – on the areas that may differentiate us from the competition; things like branding, customer care, product mix, strategy and pricing plans. This way we can always be the first in the market with new products,” says an enthusiastic Foley. 

However, save for the ‘Econet’ name of the parent company (Econet Wireless Kenya), nothing much may reflect the controversy-ridden brand – Foley says they will operate under a different brand name. 

“And we are targeting at having millions of subscribers within the first year.”

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