Monday, May 21, 2018

SAFARICOM AND PEEK INTO THE FUTURE

Last week Kenyan telecom company Safaricom, released its results for 2017. The results were met with glee by the shareholders, head shaking by competitors and head scratching by regulators and officialdom in Kenya and much further afield.

For the shareholders the company reported revenues of Kshs212b (about sh6.5trillion) up a respectable nine percent from last year’s Kshs195b. As a result they will paying out a shilling a share in dividends. More impressive than it looks especially for people who bought the share at its initial public offer price of Kshs5 or even better when the share hit rock bottom at Kshs3.

For the competitors they may have to be content battling for second.

"Safaricom controls about 72 percent of the market with 28 million customers, a figure that grew by 11 percent from last year. Voice while still bringing in the bread and butter, is no longer driving the business with their mobile money solution, M-Pesa and data services doing the heavy lifting...

Revenues from voice have been growing four percent on average over the last five years, which pale in comparison to revenues from data service and M-Pesa, which have been galloping at an average 34 and 20 percent respectively.

Regulators will be looking at Safaricom’s meteoric rise and licking their chops at how they can initiate tax initiatives now so they can harvest mightily well into the future.

Safaricom paid the taxman KShs22b (sh728b) last year, a figure that has grow by an annual average of 22 percent since 2013.

It is a moot point now, but Safaricom is a major driver of the Kenyan economy.

This it does by lowering the cost of doing business, by easing connectivity, as well as an efficient money transfer service, through M-Pesa which also doubles as a savings account, offers a credit facility and is fast replacing cash in the retail industry.

Government’s need to be asking themselves how they can enable the telecom industry’s in their selective country be more and more of an enabler in their respective countries.

This would involve not shackling them with too much tax, incentivising investment in low economic potential areas and seeking to actively partner with them in research & development to create greater efficiencies not only in telecoms and their services but also in the general economy.

The World Economic Forum recently reported the curious fact that a disproportionate number of mobile apps were being developed in Sweden. In looking back they discovered that it dates back to the 1980s when the Swedish government made a commitment to have every household own a computer.

The children who grew up with those computers are today’s innovators and developers 30 years later.

"Beyond the easy pickings now government needs to come up with a plan of how it can harness the energy of these fast growing sector to lay a foundation for future innovation. In 1980s Sweden it was the desktop in 21st century Uganda the pervasive spread of the smartphone is as good a place to start....

Thankfully Safaricom is operating in a market that is culturally closer to us than Sweden. Kenya is being touted as an East African ICT hub thanks in no small measure to Safaricom, which through its dominance has brought the phone, a powerful computer, within arm’s length of anyone with an aptitude for computing.

My first desk top computer was 250MB IBM, a reconditioned machine from Sweden (surprise!) that set me back a million shillings. It is now dwarfed by my little phone, which has eight GB of memory and one GB of processing power.

And this is much more processing power than put the first man on the moon in 1969.

The point is this that in dealing with the telecom sector or any sector of the economy for that matter, we should resist the temptation to tax it to death or throw impediments in the way of its development.

Allowed to grow with minimum impediment the small pickings we are hankering for now will be much greater in future.

Tuesday, May 15, 2018

WE ARE NOW IN THE ATTENTION ECONOMY

Imagine a world where all your entertainment needs are at the tips of your fingers and can be accessed from wherever you are. Not only in real time or live, but recorded and retrievable at a moment’s notice. But also off the same facility you can be listening to music in the background as you watch TV and keep updated on the latest news as headlines scroll at the bottom of your screen.
That is not hard to imagine because it is happening now.

What would be more difficult to wrap our minds around is world where to get entertainment you had to be seating in front of a TV. If you were lucky you had a video deck and would watch films off video cassettes. And your radio was limited to short wave frequencies which crackled or were inaccessible if you moved your radio from one room to another.

The latter is long gone reality that the majority of us can not relate to.

At the most basic level media organisations are battling for your attention. Will you buy my paper? Will you listen to my radio? Will you watch my TV channel?

In a previous time when in Uganda for instance there was one TV channel, one radio station and one English daily, media houses did not have to think every hard about capturing and retaining attention.
But today a plethora of media, not only traditional but also off the internet means our attention has been dispersed making it even more difficult to commend anyone person or group’s attention for an extended time.

Last week at the 2018 Digital Dialogue Conference media leaders from around the continent grappled with this growing challenge.

But beyond the specific concerns of the media the conference, convened by South African based video entertainment company, Multichoice, explored how this new reality is changing the people’s behaviour around entertainment and news, but how the trend is accelerating living little room for one to catch their breath.

So what is the value of your attention?

Studies conducted in more advanced western markets show that people’s attention patterns are shifting. Affected by what we consume from, and the possibilities that are presented by, the media we have settled into a pattern where we are in constant interaction with our gadgets.

Our relationships are now more managed by our phones or other handheld devices than through face to face interaction. On one level what this means that our peer pressure no longer comes only from the people around us but from people across the world from us.

Which can be a force for good, because we can widen our horizons and expand our ambitions beyond what we see in our immediate environment. On the other hand the negative effects of may include adopting behaviour which is considered normal elsewhere but may cause tension in your own context.

The world even beyond the real world, has shrunk to fit in our pockets. And this trend is projected to continue.

Futurist Paul Papadimitrou says the drivers of this development are the ever lowering cost of technology, the networks we are now tapping into and the numerous platforms we can now access.
To illustrate he pointed out that in less than a decade voice over internet service Skype accounts for half the international calls and social media platform WhatsApp has overtaken SMS as a way to communicate via mobile phones.

The net effect of this is that as consumers we have become nomadic, tribal but also singular; we have also moved from being passive admirers to being active doers and with the accelerating technological trends these distinctions can only sharpen.

Which brings us back to the value of your attention. By the simple laws of supply and demand, your attention is becoming increasingly valuable as more and more media platforms and networks take up your attention.

As a result, “The people who can capture our attention can sell it,” Anthony Lilley, professor of creative industries at Ulster University told the conference.

Which explains why in the last decade or so technology companies Apple, Google, Facebook, Netflix have overtaken traditional companies like Exxon Mobil, BP and GE as the most valuable companies in the world.

We have gone from manufacturers to services to now attention brokers as the main drivers of the  economy a trend that is already upon us.

The business community through its use of big data is becoming adept at ferreting you out, cataloguing you and inundating your with messages you are very likely to respond to.
Search engine Google is the poster child of this trend but so are social app Facebook and online retailer Amazon.

Increased interaction with this media reveals your affinity for one brand or another and therefore peg you as a source of revenue.

This interaction with the media is changing us surreptitiously, suddenly and irreversibly.

So what are we becoming? “Eighty percent of people in western economies are fans … a person who has a connection, through his identity or a social connection … what do you get out of being a fan? Comfort,” Professor Lilley explained.

Fans have affinities and sustain attention on the people, events or things that they are interested in.
It is human nature to want to belong but now with the variety and availability of people to notice, events to follow or things to like we are becoming more tribal and more singular.


Interestingly this realisation is probably a snapshot in time, with the speed of change and disruption don’t be surprised if the changes to ourselves or the categorisations businesses choose to give us change.