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How Safaricom became Kenya’s largest ISP.

There is something almost too successful about Safaricom, Kenya’s leading mobile network. Apart from being the largest company in East Africa in terms of revenues, Safaricom continues to morph from being “just” a mobile network into so much more at the detriment of (formerly) formidable incumbents. Today, Safaricom is not only used for making phone calls, but is also a leading financial services and internet service provider (ISP).

When Safaricom began operating over 10 years ago as an unreliable and small mobile network of less than 20,000 subscribers, who could have guessed how far they would go. In just over a decade, Safaricom is now the largest mobile network in East Africa. They have over 13 million subscribers as of this writing (Kenya has around 18 million mobile subscribers in total on all four operating mobile networks). A few of years ago, Safaricom launched M-Pesa which is now the largest mobile money service in Kenya with in excess of 7 million users. So successful has M-Pesa been that Banks who initially derided the service have now signed up as partners in droves – talk about change being the only constant!

Then, a few short years ago, Safaricom entered the internet business. Now, at the time, they we’re a smallish player and many of the existing ISPs dwarfed them in terms of users. However, all this changed when Safaricom secured their 3G license and aggressively rolled out their broadband internet service. Coupled with the “go live” of the TEAMS and SEACOM high speed undersea cables in the second half of last year, as well as aggressive marketing and low-cost modem offers, Safaricom as reported in the Daily Nation today now has a staggering 1.65 million Internet subscribers (these figures do need to be verified though).

To put Safaricom’s Internet dominance into perspective, total Internet users in Kenya currently stand at around 4 million. Therefore, the numbers would suggest that just under 45% of ALL Internet users in Kenya are using Safaricom as their ISP (although this may not be exclusively the case since for instance I use Safaricom but also use two other ISPs at home and in the office). How did this happen? Its all about speed and mobility – that is the value proposition of Safaricom’s internet offering, even if it is one of the most expensive services out there owing to their pricey data-capped bundles.

But it doesn’t end there. Over the last couple of years, Safaricom acquired several existing ISP’s and integrated them to launch Safaricom Business last year. Safaricom Business is a business and corporate Internet service that has entered the marketplace with highly competitive prices with lots of “extra” goodies to sign-up. So, it would appear, its only a matter of time before Safaricom becomes your one and only connection to all things Internet in Kenya – on the move, in the office, and at home. Just as they have reinvented the financial services sector, Safaricom must be giving other ISPs the jitters.

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11 Comments

  1. January 5, 2010 at 1:43 pm — Reply

    This is so very true. The thing I respect Michael Joseph most about is for spearheading what I think has been an intense product diversification strategy. It should be possible for Safaricom to spin off at least two subsidiaries catering specifically for two more revenue streams (M-PESA and Data Services). This would go on as they continue to milk the juice out of their traditional voice revenue. The numbers is all they had to secure first and you dont wanna bet that any subsidiary formed out of the two new revenue streams will not instantly become the respective sector’s market leader.
    .-= gmeltdown´s last blog ..Save Africa from monopolistic content vendors =-.

  2. lee
    January 5, 2010 at 5:06 pm — Reply

    Nice article i was kind of wondering though what business acumen or practice or even model did they adhere to that facilitated them to grow at such rampant lightning rates? How did they undercut their competition to become the authority….i think there is a real lesson to be learnt here on the direction of business..all in all nice article Mose.

    • January 8, 2010 at 11:30 am — Reply

      Safaricom’s success lies at its expansive distributorship and agency network + support and perks to its distributors as well as superior branding.

      What the average Kenyan will see when he/she walks into pretty much any commercial centre both in urban and rural areas is the Safaricom green, white and red branding somewhere. Despite them being expensive, they’re simply convenient and a stone throw away. None of the other networks have that despite their superior network or services.

  3. January 7, 2010 at 5:47 am — Reply

    When Michael does something he does it properly and with 100% commitment and effort as shown by this article. His ability, foresight and attention to detail shine through his organisation’s ethic. The power of Safaricom’s success lies with able leadership and importantly, customer loyalty. It has both.

  4. Chris
    January 8, 2010 at 5:08 am — Reply

    Safaricom have the largest “war-chest” in my view…i sometimes feel that they have us all under some kind of hypnosis (transmitted via their mobile signals!!!) coz whatever we do we still go back to their services…”The Better Option” they drilled this into us and made us believe them.

    They are super expensive though, especially with their broadband packages. If they can only come up with a viable unlimited monthly plan (for home-based users) be it for wimax or their modem thingys!!! they will take over the market! and finish the competition completely! I will certainly make the BIG move to them for internet services if they just re-structure their packages!

    Remember…Niko na (x2)…(tuko na…x2) SAFARICOM!!!

    say that a few times and you will be under their complete control! HAHAHAHAHA!!!!

    Peace

  5. January 9, 2010 at 12:00 pm — Reply

    totally tru am proud to work with safaricom
    .-= lawrence mwangi[lawey]´s last blog ..new year =-.

  6. January 15, 2010 at 11:05 am — Reply

    What Safaricom exploits is blind patriotism to brands that are potrayed as more Kenyan than the rest(Think Tusker as another example). Whereas, I cannot take away the fact that they have perfected this art well, I am convinienced that with better marketing, Zain is definitely a better value for money. You will all agree with me that Zap while looking at its functionality is a much superior proposition to M-Pesa. But again, you need the numbers to make a product sell. Safaricom broadband while boasting of 3G speeds is the most expensive anywhere in the world (KES 3 per 1M). Michael Joseph runs Safaricom in the short-term (read yearly), thats why they want to recoup their investments in the under sea cable before lowering prices (these are his words). He will do anything to ensure that Safaricom does not report a drop in profits so long as he is around. From introducing high switching costs from Safaricom to other networks to unbelievable high internet costs for Kenyans. Ultimately, we may be proud quote all huge statistics about Safaricom, but in the end, its Kenya that ultimately loses. Think of how much Kenyans would benefit from lower calling and internet costs. The opportunities that internet offers in terms
    employment and investment cannot be compared to the tax that safaricom brings to the government. Yet this is what Safaricom has become. Could we all rise up and smell the coffee before its too late.

    • Chris
      January 19, 2010 at 7:20 am — Reply

      You speak the truth!!!

  7. roy
    June 10, 2011 at 3:09 am — Reply

    I agree with Kennedy that Safaricom has been a bit pricy which they have been able to get away with by successfully locking down their subscribers with Mpesa. Considering the increased internet access through mobile phones, they are set to reap more profits from this.

  8. Mike
    May 22, 2012 at 5:39 pm — Reply

    That was true at the time this article was written. No coincidence that when Collymore took over Safaricom dropped their Home and Small Office packages. And recently he claimed that clients were misusing the unlimited modem package (which has also been dropped). Trust me any network engineer can tell you how to throttle the bandwidth on a traffic heavy node.
    MJ we miss you, the company we once loved is heading down a slippery slope. Give us your hand before it’s too late.

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