[Go Back to Archive Articles] [Current Articles ][Give your comments] [Newtimes website]

Telecommunications licensing; revisit the strategy
7th February 2007 

There has been   recent disappointments caused by the on goings with the yet to operate telecommunications service providers commonly dubbed consortiums. It appears that the concept of consortiums has been taken for granted. This has resulted to the drama that we are constantly witnessing between the main stakeholders of the 3rd mobile service provider. Even the 2nd National landline service provider has landed into similar trouble. It is no wonder that their short-lived license has now been cancelled. One known fact is that the exchequer’s requirements of aspiring landline and also mobile telephone service providers are seemingly an impossible feat for any one company, irrespective of whether it is local or foreign.

To meet those requirements, strange bedfellows whose main and most immediate common denominator is only making money (or could the writer be wrong?) have teamed up together to meet the governments requirements. Indeed, it is not their love of or desire to serve Kenya or its people that brings them together. Like informed entrepreneurs, they have united in anticipation of taking advantage of existing business opportunities. Had it been possible for one company to make it alone, there would be no teaming up whatsoever. But, this consortium business of telecommunication services has become a serious let down to this country. Notably, it was also about to flop at the takeover of Kenya Railways Corporation.

According to Oxford Advanced Learners Dictionary, a consortium is a group of separate business or business people joining together and co-operating to complete a project, work together to perform a contract or to perform an ongoing business. Without expending too much thought on consortiums at this stage, the current ones on telecommunications are headed towards doomsday. The task ahead is neither a project nor a contract. It is not even an existing or ongoing business. Consortiums as described appear to have definite timeframe. The difference is that a business has no predetermined lifespan. A project or contract safe for that of marriage must have a definite term. Our case of telecommunications is new business formed by diverse teams some of whom may have never met before.  On team dynamics, we consider four stages of teamwork which include forming, storming, norming and finally performing.

The first stage is the easiest because even strange people can easily form a team without any objectives. Some people have formed groups starting from goat eating sessions eventually finding a purpose of existence. The poverty eradication concept of merry go rounds works on this bases. Initially, the parties do not know one another and are coming to terms with their union.

The second stage of storming involves arguments and disagreements particularly, as they try to understand their roles and benefits from the union. These elements contribute to disharmony in the team. The third stage involves normalizing of relationships and understanding of how they can work together. Teams that go to the final stage of performing are ready to achieve desired objectives having ironed out all their differences. It is not always that teams reach this stage. This leads to court actions and arbitration. Continuation of teamwork is not guaranteed just because it has reached the final stage. It must keep on being nurtured to ensure continued harmonious existence. It is no wonder that; teambuilding is a major training component in business and particularly in the corporate world.

Nevertheless, it is not just a new concept that has come from the west. The principle of teamwork is one of the 14 that were developed by Henry Fayol, one of the foremost early 20 th century pioneers of Management Science. Why it looks new in our circumstances is that there has been too much practice of traditional management in the past. There has been no due regard to changing business environment or circumstances. All the executives of business organizations needed to do is to retreat to Mombasa, Naivasha or elsewhere and come up with 5 year development plans. On small businesses or SMEs it was just a matter of opening shop and wait for customers for years on end. Traditional practices worked well for both big and small business but not any more.   

The dynamics of doing business have changed. They have changed because of changing business environment. Some Government regulations are seemingly contributing to the tribulations of the so called consortiums. A Consortium meanwhile is in business terms a universally acceptable strategy as was formulated by Professor Michael Porter of Harvard University.  It is one of the strategies of business expansion. It is based on the premise that unity is power. This writer views this unity suspiciously. But how do they exactly work? A good example of consortium arrangements is the teaming up of the Common Markets for Eastern and Southern Africa (COMESA) countries. They came up together to take advantage of the regional market.  PTA (Preferential Trade Area) Bank and PTA reinsurance Company both born out of the COMESA arrangement are other good examples which are working. They have worked after many years of boardroom negotiations which have involved substantial give and take. The overriding factor is that they have not been born out of short-term gains.

In the current telecommunications consortiums, the stakes are two high. The strange bedfellows have teamed up to form giant companies whose only interest is to make money from the seemly lucrative sector. The International investors form arrangements with crowds of stakeholders, just to satisfy the Government 30% local ownership requirement. What results are protracted wars, (read storming stage) which are of no benefit to Kenyans who are eagerly waiting to have the telecommunication sector tamed through competition.

The way to go is not through consortiums. They might never result to performing teams. The Government should rethink its requirements. Perhaps, International investors should be allowed to set base and commence operations under strict government supervision. Within a set time span of say not more than 5 years, they should have issued prescribed shares to the public or local companies.  Within 5 years they, will still be expanding thus have little or nothing to repatriate home. Kenyans with their insatiable appetite for investing in shares will gladly buy into these companies once they are up and running.

The time for the government to rethink the deregulation strategy is now. This will encourage the existing key players namely, Telkom, Safaricom and Celtel to be even more proactive in anticipation of change. The current price wars between the mobile service providers are an interesting turn of events. Even Telkom Kenya has not been left behind. It has since introduced a mobile landline telephone. A recent follow up is the abolition of trunk calls anywhere in the country and even more recently the wireless solution; but the charges are still too high.

Did you ever know that landline telephones are free within Dubai city? Enter any shop and you will make your free local calls as you do your purchasing. Regarding calls within mobile company networks, it is like calling internal extensions, therefore no costs safe for depreciation which is commonly referred to as wear and tear. It involves negligible costs. There is all the justification to have price reductions in telecommunication services. Individuals and  small businesses particularly would be major beneficiallies.

This  writer is sorry to say that the so called local telecommunications consortiums, may never deliver Kenyans' expectations any time soon, particularly given their disharmony. Worse still, it appears that it is the courts that will deliver them to the norming stage. The writer wonders whether his former schoolmate, Mr. Hon Mutahi Kagwe, can hear these sentiments raised on behalf of Kenyans.

The telecommunication sector needs performing teams. It is only such teams that can deliver Kenyans’ aspirations of efficient and reasonably prized services. Allow single international investors to roll out their telecommunications projects, subject to selling shares locally in a structured way.  The sector will become more competitive and efficient and besides create more opportunities to invest in for individuals and SMEs in the medium term.  

Newtimes Editor.

[Go Back to Archive Articles] [Current Articles ][Give your comments] [Newtimes website]