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Africa: Mobile Networks' Rivalry Promises Huge Benefits
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Business Daily (Nairobi)
COLUMN
17 July 2008
Posted to the web 18 July 2008
Daniel Mayabi
The mobile industry is at least one of the most positive growth areas in the African continent stories of this past decade.
Michael Porter of Harvard Business School, a leading authority on competitiveness, sums up factors that shape the environment in which local firms compete into five forces: national existing rivalry between suppliers, bargaining power of buyers, threat of new market entrants, power of suppliers and threat of substitute products.
No area exhibits existing rivalry among suppliers in Kenya like what has been observed lately in the ICT industry and more closely in the mobile telecoms industry. The two key market contenders, Celtel Kenya and Safaricom, have been at each other for a while. Both networks have undergone key ownership transfers.
Prof Porter argues that there is a strong association between vigorous domestic rivalry and the creation and persistence of competitive advantage in an industry.
Looking at it positively, we discern that mostly after the fuss has matured, rivalry induces firms to look for ways to improve the allocative and productive efficiency, thus positioning themselves better to handle competition.
At its simplest, the domestic mobile networks competition has been the force behind the intense innovation and pricing war at Celtel and Safaricom.
As competition heightens with more players coming in, we see great benefits for the economy as the players will inject more capital for equipment, research and development.
More so, without rivalry, none of the network providers would engage in the costly upgrading of its network transmitters to ensure sound delivery of services. It has also been seen in poaching of the right talent to stay ahead of the pack.
At the rate of things, one would yearn for the day Celtel also lists on the Nairobi Stock Exchange.
With the expected launch of Econet Wireless, the boardrooms of the earlier two networks are anxious as Econet also fires on all cylinders to beat the Communications Commission of Kenya July 30 deadline seen in, among other things, the recruitment of key staff, some previously worked for the competition.
But more is in the air as Telkom Kenya rolls out its GSM services by September.
Although there is still a substantial market base for the threesome party, it remains to be seen whether the biggest East African company by turnover shall remain in the ICT business segment next year. The winner of this positive rivalry, the consumer, shall remain sovereign.
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Mayabi is an architect in Botswana.
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