JIMMY THE MAN! KIBAKI'S AND MOBICOM

THE first family's hand has not been seen much in business as have their two predecessors save for the traditional businesses such as the Silver Springs Hotel but that can be claimed to discretion.

Nairobitech has established that the much touted Mobicom, lately a dealer of Safaricom and now in the Telkom Kenya camp has no less a personage than Jimmy Kibaki, son of Kenya's current president, behind it.

Speculation has been rife about the publicity-shy Paul Ndung'u, the chairman of Mobicom who also owns sizeable stakes in many listed companies on the Nairobi Stock Exchange but it would appear that he may be merely the front-man for Jimmy.

At their Gigiri premises, it turns out, Ndung'u plays second fiddle to Jimmy who is the effective chairman of a group called Lucia Enterprises.

Lucia Enterprises is the mother of two companies: Mobicom and BMK a company that runs a fleet of forex bureaus.

Those who know Ndung'u will recall he used to run a forex bureau along Kimathi Street together with an Indian businessman.

Before that he was at Uchumi Supermarkets.

Ndung'u and Jimmy are distant relatives.

AARGHH! ROAD CONTRACTORS AND SAFCOM'S CABLE

The last thing Safaricom wants at a time when it is locked in a vicious price war primarily with original foe Zain as well as the other two mobile operators in the market, is a failing network.

Which is what happened today. Internet services were down.

The most dialled number by IT guys in different companies today was 0722 002222. That is the internet support service line for Safaricom. For a company that buys bandwidth from Safaricom, those are the guys you deal with.

For most part today (Sunday, 29th August 2010), calls to this line went to recorded instructions as Safaricom guys worked to get their services back on track.

From early morning to early afternoon, internet services, mobile phone calls as well as M-PESA services were down on Safaricom's networks.

It transpired that some road contractor working in the Upper Hill area, near Britak, bulldozed through optic-fiber cables laid alongside the road and in the process severed lines belonging to at least three cable operators.

Maximum impact was felt by Safaricom subscribers because Jamii Telecom, on whose metro-fiber Safaricom rides, was one of the casualties.

John Kamau of JTL said it took them almost until 2 O'Clock to fix the problem. In the meantime, Safaricom's services like corporate internet in offices, mobile internet service, GSM calls and even M-PESA were affected.

Kenya Data Networks (KDN) was also affected. In fact, KDN suffered two cuts, at Upper Hill and at Museum Hill where China Wu-Yi are putting up that interchange to link Uhuru Highway with Thika Road.

Vincent Wang'ombe, KDN's marketing manager said the company was working to fix the problem by end of the day today which should see all customers back online.

Both JTL and KDN complained that contractors have been haphazardly cutting their cables and now want government to recognize fiber cables as crucial infrastructure.

Water and power lines, they said, are usually given ample time to shift from the construction area.

Safaricom in the meantime was back in service shortly after 2PM. Media Houses had hitherto had a hard time reaching key personnel to get the official line perhaps making the case for even dyed-in-the-wool Safaricom staff to also maintain another operator's line in case of such disruptions.

YOUR CALL CANNOT BE COMPLETED: MEZA CALLS JOSEPH

The following conversation took place Wednesday night between Zain MD Rene Meza from his Blackberry and Michael Joseph from his iPhone.

IT Starts with Rene Meza writing to Joseph. Note the times...

On 18 Aug 2010, at 21:53, "Rene Meza" wrote:

Dear Michael;

I hope this email finds you well, it’s been a while.

Not sure if you’re aware of the fact that we started to experience congestion in our route to Safaricom and have escalated to your team, who came back to us mentioning the fact that they need to go through an internal approval process, which is perfectly understandable.

I’d appreciate if you could intervene in our capacity increase request as soon as possible.

Furthermore, I understand we have an overdue payment for interconnect charges with Safaricom which we plan to pay 100% tomorrow.

Thanks for your understanding and look forward to a positive response.

Kind regards,

Joseph then responded:

From: Michael Joseph
To: Rene Meza
Cc: Clare Ruto ; John Barorot
Sent: Wed Aug 18 22:00:14 2010
Subject: Re: Congestion Zain-Safaricom Route

Rene

I will check tomorrow. Did not know about this. Should not be sn issue

Regards

Michael Joseph

CEO Safaricom

Sent from my iPhone

To which Rene responded:

From: "Rene Meza"
Date: 18 August 2010 22:04:49 GMT+03:00
To: "Michael Joseph"
Cc: "Clare Ruto" , "John Barorot"
Subject: Re: Congestion Zain-Safaricom Route

Thanks Michael, really appreciate it.

Kind regards,


----------------------------------------
Rene Meza

Managing Director

Zain Kenya


---------------------------------------

Powered by BlackBerry on Zain.

ANALYSIS AND DEVELOPMENTS UPDATE:

So as at 10 O'Clock Wednesday night, the agreement was that Safaricom CEO Michael Joseph would look into the issue Thursday morning.

When he woke up Thursday, Joseph found that Zain had issued a press release accusing Safaricom of sabotaging their new tariff.

At Safaricom House, they were furious. After steaming over the issue, the consensus that emerged was that Zain had not formally made a request for increased capacity and that if and when they did that, it would be granted under the agreed upon procedures laid out in the two companies interconnection agreement.

At this point suffice it to say that Rene Meza dropped the ball on this one. Having gotten the CEOs word he should not have sanctioned the alarmist press release crying sabotage before getting word back from Michael Joseph.

Even as the publicity war escalated, the engineers at Zain were desperately trying to get their counterparts at SafCom to resolve the issue.

Central to this are Alec Mulonga, the Network Director, Zain Kenya and John Barorot, Chief Technical Officer, Safaricom.

Clearly after the morning attack, Barorot was not taking calls from Alec, but then again, it depends on whether Alec was calling from a Zain line. Frustrated he sent Barorot this email.

From: Alec Mulonga
Sent: Thursday, August 19, 2010 10:25 AM
To: John Barorot
Subject: Request for Zain-Safaricom Interconnect Route Expansion

Dear Sir,

I tried to call but I presume you were busy.

I would like to request your support to grant approval for Zain’s request to expand the Zain-Safaricom interconnect routes. We have been in contact with Mr. Odera regarding this request and he indicated to us that he is seeking approval for the request. We appreciate his support so far at very short notice, but would like to request your intervention for possible acceleration of the necessary approvals.

In summary, the expansion request is two phased as follows:

· Phase1: to give us immediate interim relief, we propose to optimize the existing capacity by declaring more devices in the Zain -> Safaricom direction

· Phase2: for a long term plan, we are working on the ideal capacity requirements with sufficient headroom and will share with your Core Planning team in the course of today.

Looking forward to your feedback.

Regards,

Alec Mulonga,

Network Director,

Zain – Kenya.

THE STATE OF PLAY

Safaricom as of now says it is yet to receive a formal request for increased capacity from Zain. The email from the MD Zain Kenya apparently does not constitute a formal request.

Zain is not backing down though. They have embarked on building their own link which should be ready in a week's time.

The mood is bullish at Parkside Towers.

"This is just the first card we've dealt," a senior manager at Zain said. "We have four more cards to play. We are just waiting for the reaction from the market."

Reaction has been astonishing. Users have flocked Zain shops to get Zain lines and some savvy operators have taken to selling people SIM cards on the lines snaking out of such shops.

In Mombasa, the dealer there was cleverer. As residents awoke to Zain's full-page ads on the new tariff, the dealer opted to hand out lines to everyone who bought a newspaper.

Manoj Kohli, the Bharti Airtel CEO for international operations had this to say about the Kenyan market.

"We are not saying that we will succeed 100 per cent in capturing market leadership. But we will make it extremely difficult for our competitor to operate."

TYCOONS ON THE MOVE! MOBICOM'S PLAN

Reclusive Kenyan billionaire Paul Ndung'u (left in the picture) came to the limelight this week still protesting that he doesn't like people to know him.

The man who holds the single largest individual stakes in many listed NSE companies also happens to be founder and chairman of Safaricom's largest dealer, Mobicom Ltd. That at least was the case until Mobicom terminated the deal last week.

The move to ditch Safaricom came as a surprise to many but even more astonishing was the announcement that Mobicom would now be dealing for Telkom Orange, the consensus sleeping giant of the Telecom sector.

Just what does Ndung'u and his equally rich partner and MD of Mobicom Joel Kibe see in Telkom?

The simple answer is CAPACITY! More on that later but first ruminate on the size of business that Mobicom will be giving up.

As Safaricom's largest dealer doing just about 10 per cent of its business, Mobicom moved Sh450million monthly or roughly Sh5.5billion in turnover annually.

They had 42 Safaricom shops which in turn fed sub-dealers and agents across the country.

By size they dwarfed Samchi and Capital Real Time, two other well known SafCom dealers.

So why move to Safaricom.

For starters this was a deal three months in the making. It was negotiated not just with Telkom Kenya but with France Telecom.

Secondly, Mobicom stands to have Superdealer status as it is the only among the other 56 Telkopm Dealers that has a national presence. The others are regional and will likely have to deal with Mobicom.

But as Joel Kibe put it, the silver lining is in capacity.

"Telkom has a lot of idle capacity," Kibe said.

Apparently, Mobicom is confident it can sell this capacity and make more money than it was making in Safaricom.

Starting August the company will spend about Sh30million to rebrand all its shops with Orange colours.

It then plans to stock a wide range of products including modems, telecommunication equipment, WiMax radios, CDMA gadgets among others. It will also sell fixed lines to customers.

So this is where matters stand, Mobicom believes it has the footprint to take Telkom's products to places where the latter does not reach. Particularly, it hopes to sell the enormous capacity on TEAMS/Eassy that TKL has as well as on Telkom's terrestrial fiber optic network and the Telkom managed government owned National Optic Fiber Backbone (NOFBI).

Kibe 's parting shot: We could do up to Sh20billion in revenues.

SLEEK BROTHER! MAD MANOUVRES MICHAEL OKWIRI

I first heard it from the inside, that as jostling and positioning continues within the Zain fraternity following the acquisition of the African operations by Bharti Airtel, one fellow who would probably emerge in a stronger position would be Michael Okwiri, currently in charge of communications, Zain-Kenya office.

"This guy went to school in India, that's the first thing," the Zain employee said. "Secondly, he knows how to read a script, if you don't surprise him and tell him these are the questions that will be asked, he will shine."

Ostensibly, Okwiri knows how to make a presentation and without getting into Ervin Goffman's analysis of "Presentation of the Self" suffice it to say that he has impressed the new big cajunas at Parkside to warrant a promotion.

Nairobitech has learnt that Okwiri will now go to head Zain Africa Communications Office putting him in charge of communications in 15 African countries.

Not bad brother. One person who might be left feeling lonely is Rene Meza. These two were thick as thieves and practically ran Zain Kenya together.

As for Meza, let us hope he learns from his sidekick and makes all the right noises to keep his seat.

BREAKER, BREAKER! CLEAR THE LINE:ARMY VS 4G

Who is more important? Security Forces secret communication or your mobile internet experience? This is not a theoretical question, it is one that the Communications Commission of Kenya will have to confront soon.

It is emerging that the next step in mobile communication technology, the so-called 4G or Long Term Evolution LTE faces a major hurdle in Kenya. The frequencies at which 4G operates, 2.4GHz - 2.6GHz, are held by Kenya's Armed Forces.

Now that is a problem!

So although Huawei Technologies are ready to deploy the technology for their client Safaricom, they cannot because the frequencies are not available.

I don't see the Army just giving up its frequencies and I wouldn't even want to imagine how much of is tied to these frequencies much in the same way most handsets are only second generation and cannot work with say 3G.

You see, mobile technology is now at what we call third generation 3G stage in Kenya -Safaricom has 3G, Telkom and Zain are rolling it out.

Previously, we were at 1G Analog, then we moved to 2G digital (voice, SMS) where most Kenyans are today. The bulk of mobile phone subscribers have 2G handsets and only now are more and more people on 3G (Multi Media, video etc) enabled handsets.

But there is talk of moving to the next stage, 4G where speeds are seen to be truly blazing.

Which is why the Communications Commission of Kenya needs to step up and reorganize spectrum management in the country.

For example, Safaricom because of the current situation where Armed Forces occupy the frequencies which should be used for 4G had said they would consider using the 2G space to deploy this superior technology.

But the bulk of their subscribers have 2G handsets so they can't do away with 2G or risk cutting them off and it will be sometime before majority of handset makers have affordable 3G handsets.

The situation is further compounded by the fact that the space within our Radio Frequencies that mobile operators have been allocated are similar in size. But Safaricom has 14million subscribers while others have a combined total of less than 5million.

So congestion is all too likely to be an issue. CCK however, needs to come out boldly and say what it is doing about the Spectrum issue and not be a hindrance to development of technology.

FINALLY KCB GETS A GRIP ON THE CASH! T24

If you don't know why KCB keeps talking about its new core banking system T24 that it has deployed across its 212 branches in the region, picture this.

Before, you could go to your ATM withdraw all the cash there, then walk into the banking hall and do the same all over again and walk out with double the green you had in your account.

Reason? The bank has been running a separate ATM system from the one running inside the banks.

In fact, the banking platform KCB was using was so inadequate that it could serve a maximum of 99 branches. This means, the additional 100 plus branches had to be connected to these others as some sort of extension office.

To run an ATM system, the bank now had to get a separate platform from the already overstretched banking system and this created the gigantic loophole that I mentioned above.

Reconciliation was not instant. Therefore, transactions on the ATM network would not automatically reflect on the main banking system meaning even if you had cleared your account, you could walk into the banking hall and do an over-the-counter withdrawal without the bank suspecting.

Truth would dawn on them much later.

The versatile T24 system solves that and ensures the bank is on top of every transaction carried out within its system.

It also means you do not have to be attached to one branch, any of the 212 branches of KCB that you walk into, be it Rwanda, Southern Sudan, Zanzibar etc, will act like your local branch.

The bank is now installing new intelligent ATMs and upgrading from KCB Quickserve to Visa Electron.

Kudos!