Monday, 3 October 2011

Safaricom Business Model is Unethical

Safaricom business model was and is still based on the 'capture of subscribers' and locking them in forever. This happened and continues to be the case because of several things: One, the conditions in the mobile telephony sub-sector were conducive back then when Safaricom came into the scene with only one competitor who was exorbitant. Two, Michael Joseph an expatriate with considerable knowledge in mobile telephony business models and having studied properly our peculiar calling habits, chose the capture model. Three, the capture was based on tariffs all along until the company went public. In the IPO, the company chose to make the share price ridiculously affordable by discounting it heavily so that every subscriber could own a share and something which would have the net effect of further ring fencing the hapless subscribers. The only reason Safaricom has the audacity to raise its tariffs in the face of stiff competition and in the thick of biting inflation is because their subscribers are locked in for good.

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