THE ONCOMING MOBILE DATA WAR: THE NEXT BATTLE IN AN OLD WAR

At what now seems a long ago time I was invited to the finale of the 2014 UEFA Champion’s League live screening. It was the epic clash between the mercurial Athletico Madrid and the galactic Real Madrid. Going into the clash Athletico had overcome the giants from Milan, the ensemble from Barcelona and had left the Chelsea bus in tatters. They had done well indeed but the Real Madrid team had overcome 3 German teams to get to the final; Schalke 04, B. Dortmund and B. Munich. They too had overcome great odds. Now I’m not a football fan or enthusiast for that matter but I remember these details because in the middle of the match I got into a somewhat animated conversation with the epic Boaz Shani. One that would niggle me to no end till today;

I postulated that there was a data war coming. He said that what I was saying was what the market had said when Seacom had launched back in July 2009 and it was all speculation. He insisted that the telecoms had been too lazy to roll out and sell the requisite amount of fiber and internet connections that would drive economies in order to generate profits. He said that the internet prices as they were, were guarded by a “cartel” of people enjoying super profits and in whose interests it wasn’t for prices to drop. I was perplexed. So I probed.

“How about the many more people they would connect? They could make more money, they could translate the internet into all sorts of languages, answer all sorts of questions that farmers  and small businesses had,” I asked.

The answer came back clipped curt sentences. “That means nothing to them. Just last month I fired my internet service provider. I mean I’d been with these guys from the beginning. I had brought them lots of business. I had referred all my clients to them. And they just disconnected me without even a phone call or a notice or even an invoice. I now know they have grown too big to care about us small businesses. And that’s the problem with the whole industry”

“So where do we go?”

“The answer will come once the Google satellite is up and the country becomes one big hotspot. Well maybe not the whole country but even just Kampala. It will be enough for internet prices to plummet and these Telco’s to learn their lesson”

He made so much sense I almost believed him.  But I wasn’t convinced. If the Google internet was going to level the field why were the telecoms doing nothing about it since they would most likely be the hardest hit? My own observation had been that since the last great price wars that brought so much misery and tears to the category vows had been taken never to go back there again. Never

The price wars left everyone bleeding

But after the Airtel Warid merger the market had moved to stasis. Growth had almost plateaued. However Orange which hadn’t had much success in the voice category had been continually registering considerable success in the data category especially on the small screens which surprisingly didn’t reflect on why the big screens. Someone somewhere asked “What are those guys doing?”

So it crept up on us.

Slowly, deliberately, MTN Uganda’s communication started having social networking icons. It started with Facebook, then twitter, then YouTube and now you’ll find LinkedIn and Instagram. This of course followed by their recent release of the “What do crocodiles eat?” TV commercial shows a focus by the business on internet services as a priority.

The recent launch of Airtel’s “Switch On” – (good product review to be read here) also indicated that this area has growth potential.  What’s interesting with Switch On is the way it was built like a lifestyle product – not inflexible and rigid like most of the category products but responsive and built around how consumers live and use data. Almost intuitive – this was a win.

Even Smart East Africa Telecom, the newest market entrant in the Telco sector entered with a data offer. 30 days free surfing and data. The offer might be attractive and as most things in this market go, it will be tested. Ugandans never fail to test (they use the word “Jaribu” more than the originators of the word which is of Swahili origin)

However corporate war like the military war of days past has morphed like modern day warfare into something of a fight-between- handcuffed men. After the Uganda Communications Commission (UCC) put out their moratorium on all telecom promotions the market is likely to see an increase in the how-much-providers-will-offer-customers versus the previous who-has-the-lowest-price model. So there will be no dramatic price cuts and no front page news about this. Not yet. 

It will be who offers more.

But all the above is only an indication of war, nothing more. Well that may be true but when the two biggest players in the market – who ostensibly have the most to lose start shoring up resources and the small players do about or learn nothing from it, there is little wonder why they are small players.

Will the data war wait for Google to launch its satellites over Africa? I don’t think so. I think that with two more ISPs entering the market by end of year both heavily backed to drive data acquisition and marketing to the hilt we are likely to see moves and steps that will drive customers’ uptake and optimal utilization of the data space much much sooner. Here are 6 trends currently in motion that we are likely to see amplified going ahead:

1. The Age of The Device: We will see increased focus on devices and whether this is from the telecom network operators MTN, AIRTEL, ORANGE, SMART, UTL, etc. ) Or from devices providers (Transtel, Nokia, Huawei, etc.) themselves it will matter little. The biggest challenge in the past was access in the last mile; how would people access this wonderful world of the internet? How would they enjoy it? How would you sell them data if tehy had no smart phones? Given the wildfire growth of WhatsApp, Facebook and other apps I feel confident to say the device saturation will get there soon enough.
2. Product Recombination and Innovation: We will see more combined and spliced product offerings; those with more will offer less product and more options. Those with less with offer more product with less options. Confusing? If all you have is data, you will offer more ways to enjoy that data, (e.g. is smile@night/weekend  bundles) while if you are a telecom operator you will look to offer minutes, SMS and data packages/combos to customers as a way to entice data consumption. Whichever way you do it, its important that get to know that your data offering is solid.
3. Speed, Like Size Does Not Matter: Speed isn’t what it used to be. Customers don’t are for it as much as they used to just like women moved on from their obsession with size. Why?Because speed is a function of technology and investment. If a customer gets a faster phone they will enjoy more speeds, they know that but they are happy with what they have. If the ISP or telecom gets more money, they will invest in upgrading their users' experience to the next level of speed and tehy also know that. So speed doesn't differentiate. Stability is the key now. The connection has to be stable. It can be average speed but stable is important. And that is why Smile has picked its niche and is comfortably nestling in it. A stable connection means your download links won’t break but is also predictable and that is a critical thing with the web.
    
4. Experience Will Drive New Inroads: From the Orange Expo to the MTN Internet Expo we are seeing more demonstrability of capacity and possibility by providers and operators to bring an experience the public cannot find in great advertising. It doesn’t mean people will not need the great ads but it means before people buy they will want to “see” the Ugandan way – with their hands!
5. Sharing And Engagement Is The Master Key: When “#StanAirtelUg” hit the market about two years ago no one thought it as possible to do; to have round the clock response to customers online for the second largest telecom provider in the market? Impossible. But they did it. #StanAirtelUg proved that appearing superhuman, being indefatigable and being on point with customer responses was possible. To a point where “Stan” was the answer to everything. Was Airtel going to launch a rocket to the moon? Ask Stan. Would Museveni retire in 2021? Ask Stan (sic) even Stan doesn’t know that one. Anyway, the point being they broke a barrier and challenged the industry. Now at every moment the MTN Instagram page is filled with what they are doing, where they are or who they are rewarding. Is it exhausting, redundant, time consuming? Yes, but if they don’t do that people will never spend their MBs following them and will instead end up on the @Bus250 IG (Don’t ask how I found out). The truth is that other brands are building their engagement platforms as well but they are all following the leaders and that’s who we really talk about on here. We are seeing a lot more traction in the advocacy and NGO sectors too and that will continue to grow as engagement opens up an erstwhile apathetic young audience to issues and activism. If people can share it, they can talk about it – and you can talk to them.
6. The Rise of The Influencer: call them big wigs, influencers, twitterati whatever you call them. They are looked up to in the social media world and digital world. They can be recognized by followers, influence, responses, like, follows, RTs, Favs name it. People who in online speak “run these streets”. Whenever brands have had run-ins with them, there’s been carnage and bloodletting. Why? Because these customers are articulate, they are sharp, they are educated and mostly fearless. Some classic examples was the epic battle between Caleb and MTN when he started that page MTN SUCKS; they called him to their office and things got heated; then of course the dance of death that happens regularly between Dr. Thome and Umeme whenever there is no power in Bunga; the short lived spat between Collins and Vivo Energy didn't last since the brand capitulated. But its not been all bad because there are good moments too, for example when KFC launched in Kampala it was trending for two weeks on social media that there was food for 99,000/= or that hashtag #AtDuskWeRise; much spoken about but not as much done to raise the requisite amount of FOMO. My last example is the last how all the influencers came together to “"#BuyABrick"” for the 40 days over 40 smiles campaign to build a dormitory in Luweero for an orphanage. Splendid use of influencers and all done on a small budget. As brands move, they are going to need to build their own arsenal of influencers; people who will stand in their corner when the gloves are off. Yes, they can be bought but you don’t have that much money. So build engagement experiences and make them love your brands.

Image taken from @Ayampatra

The war is coming. I only hope we are ready both as customers and brands because surely this only where the fittest come out alive. Just like those real guys crept up on Athletico Madrid in that finale.

Spartan out!

In Uganda what you wed isn't what you marry - Airtel and Warid Part II

In a recent blog post I was talking about what the buyout of Warid by Airtel meant for Uganda. And now that the wedding campaign has come out and we know that the fact for sure is that it is real I think it’s going to be exciting to see how the in-laws work together to make sure the marriage stays together or doesn't. Well from an industry standpoint the issues to fix will be many.

Well, because not unlike human relationships marriages (or mergers) are not easy. The first issue normally comes with choosing which side of the bed. A small issue but you see in the end even when the wife will take her husband’s name she will have great influence on how happy he is for the rest of his life. So he has to make certain concessions. I think things like that can be deal breakers and impact the relationship deeply.

It is my strongly held view that while Airtel has its merits it also has challenges that will not allow it to get the most out of its new “wife”.  Its like how you date the most enviable girl on the market and you marry her. The truth is that all the other guys wanted her but didn’t have the cojones to approach her. But in reality while you had the balls in a moment of courage you can’t tame her or keep her down or whatever male subjugation of women is called these days. She had a life of her own before you came and you are hoping she dims her brightness for you. Ugandan women – no chance. You must find your place in her shadow /spotlight or another wife.

As the most enviable brand in the market people were aware of what they were buying. They knew where Warid was at every point in the value chain. Known for the most innovative product offers on the market that bright star considerably dimmed when compared to the lackluster and modular Airtel charade. The truth is that integration of products can happen but when push comes to shove most of Warid’s innovative products will be dropped in order to drive a more streamlined brand agenda and product profile. The sad thing is that those were the things people loved about Warid in the first place. So the wife must assume the position and prepare herself. Things like the Entrepreneurship Fund don’t have equivalents on the robust aggressive Airtel side of things. Like marrying a man who never puts the toilet seat down when he goes to the washroom, he never knows why you get UTI after UTI. If he changed his behavior he might be able to afford that little dress you want.

Buyouts are different from mergers in that the guys who get bought out never get a choice on whether they stay. Most times a young blue-eyed auditor from a world renowned audit firm works out the optimum “offload capacity”; how many resources the buyer is able to take on with the buyout and therefore the rest will have to be offloaded. Now it might mean more revenues for Allen and her cohorts at the URA but if more than 50% of the current employees at Warid get laid off she can expect that much less in taxes and probably not as much an increase in boda boda revenues as their new chosen professions start to emerge. Kind of like a guy telling you after getting married that you have to drop your single wild partying friends since they “aren’t in your class anymore” and yet that brother met you in club!!

Most times the husband determines the sex positions the relationship will assume. Sure when you are dating he might let you ride on top a few times but my feelings are that this normally tends to change once the ring is slipped on. Similarly, if it was not previously determined how the customers are going to get screwed, there are going to be issues about this. Mass market pricing and continuously communicating seemed to have worked around what Warid was doing however whether this will work for the aloof new head of house is another matter. We wait and watch for changes coming soon. For now I would tell the customer to assume the position.

Speaking about positions, when the hottest girl on the market gets taken other girls get jealous most especially her friends. It says they weren’t worthy enough of the ring; especially when some of them have been on the shelf for a longer period of time-openly looking to be picked up, attending weddings, being at funerals, showing open interest, going to the gym so as to hide the cellulite [read UTL]. It simply isn’t fair. It makes them seem less attractive and openly speaks about their value to the market. But then what I think is that such behaviour prompts the lady in muzigo number 3 to get all antsy and start asking for her own wedding (no more akawundo kakubye’dirisa – Luganda for cohabiting). And we can already see this behavior with freebie Fridays, bonus weekends, etc. We are going to see a lot more “promos” from MTN before the market settles. Whether that is a bad or good thing we are yet to see but I can tell you that all the miniskirts are going to come out now.

Meanwhile back at the ranch

Now how about the step children? Anyone in the industry and who knows their products well knows that Warid Pesa was the most superior mobile money product offering on the market. Some have argued it was a technology thing [a superior IN] and others had it down to the Chinese invasion [Huawei and ZTE]. Either way the erstwhile sheltered child of the home Airtel Money was not as boasted or even as robust. With the marriage comes the scenario of the mother saying to the father “don’t let your child spoil my child with his bad manners”. One of two scenarios could result. The stepchild is abandoned; Warid Pesa gets chopped up for pieces or some modules but is overall co-opted into Airtel Money. In the second scenario; the stepchild thrives and shines – someone thinking straight takes Warid Pesa and gives it its true place in the spotlight and watch it make money for them.

When I first said the reason for the buyout was because Airtel needed a superior product to compete with across the continent, it was argued that Uganda was the last place to look for such a thing – since as my former boss used to say “Nothing good grows out of Uganda” but consider this for a minute. If you buy Warid in Uganda you not only get a challenger brand and 3 million customers, you also buy a mobile money product superior to anything you have anywhere on the continent in 17 countries, complete with its copyrights. Now the details were not disclosed but if I were an Indian billionaire I would think that’s 17 stones to pay for 2 birds. Like marrying a girl and finding out can also cook, and think business. Don’t laugh, in Kampala it’s like a venn diagram to find a girl who can do all three!! The third quality? That one they can all do – with bells and whistles!

I think that we are bound for some turbulence ahead but then again like most things Ugandan, someone who is NOT the ordinary citizen will win. We can celebrate now and we should because after all who doesn’t need a party in these dark times but we should always keep an eye on that shiny horizon for the sky rumbles and cloud billow with the wind of changing times.

The Airtel - Warid Buyout: The Grim Agency Future Ahead

Two weeks ago when the news broke that Warid Telecom, Uganda’s 3^rd largest telecom company had been acquired by India’s Bharti Airtel in a move that has effectively polarized the market there was a lot of acrimony over “another change” just as people had grown to love and enjoy where they were getting comfortable. The truth is that Airtel has changed its name 5 times since it first launched and still bears residual angst towards it from the public because of their very early transgressions when they launched as Celtel. Let me point out here that despite all appearances the seemingly apparent reason for the merger is to take on South African telecom behemoth MTN.

After reading Ruthaine’s thoughts on the matter I started asking what would happen to the employees of Warid. Poor suckers. The usual toll of a merger is that about 75% of the acquired firm is shed and replaced with more technologically efficient systems. And with over 500 employees, there would be no less than 350 jobless people soon. Then it hit me even harder what about the advertising agency? Those who know what I am saying a company’s advertising and marketing agency is critical to its success and in most cases has its fortunes interred with those of its clients(it must be said though, those retainers always create comfortable cushions for agencies to sit on).

A new Airtel promo where they are promoting the Nokia Lumia 620 

Airtel’s advertising is done by the experienced Moringa Ogilvy team seated in Bugolobi. They have done quite nicely for themselves. The Moringa Ogilvy team gets its Ogilvy name from its Ogilvy Africa affiliation by paying a nice handsome fee every year to ensure they keep using the name. In return, they get first pick of any Ogilvy businesses coming into the market territory. Ogilvy East Africa was bought out by Scangroup back in 2010 where they acquired the larger share of Ogilvy Africa’s holdings outside South Africa. What did this mean? That Ogilvy East Africa would go under Scangroup. When Ogilvy &Mather pitched for and won the Airtel Africa business, they rested it there because Scangroup, the parent company was already handling too many telecom accounts what with Safaricom, Vodacom, Warid and Tigo across the region. Anyway this explains how the affiliate agency in Uganda ended up with the Telecom account. Anyone who has had to pitch for a telecom account will tell you how serendipitous it must be to just have one handed to you.

Attaining Superbrands status in 5 years, the Warid brand is a force unto itself.

On the other side of the pond Scanad Uganda, largest and by far the most efficient ad machine has been handling the Warid advertising and marketing account. It must be said that they did not give Warid the Pakalast name and fame, that award goes to a smaller but equally ingenious agency – Maad. What they did do was bring Warid to a point where it has had all of its competitors shitting bricks with ad campaigns that have literally remained top of the public’s mind year in year out and have created such a high bar for the industry and anyone trying to get people to remember anything. If you think I am lying ask anyone next to you to tell you the Samona or Omo or Standard Chartered tagline or ask them who Onesmus, or Milton or the Kungfu Master is? Simply marveling. Scanad is part of Scangroup. Their revenues are reported as part of the Scangroup success story. Now that they have lost their beloved Warid Telecom what will they do?

If I were Bharat Thakrar what would I do?

Airtel Nigeria proved that you don’t need to work with an Ogilvy affiliate after they appointed STB McCann to run things for them (with all the ensuing drama). This simplifies the task of Bharat explaining to Sunil Bharti Mittal that the Airtel Uganda should sit with Scanad Uganda. I presume the conversation would go as follows:

1. Scanad Uganda has a larger; more experienced team directly connected to the Scangroup resource superstructure and therefore would present as a better agency to work with.
2.  Because Scanad is directly linked to the group and is not an affiliate its revenues would be going directly to Scangroup hence revenues and profits would be kept within the group.
3.  If market prevalence/awareness is anything to go by Scanad have produced more memorable work in the last 2 years which gives them the best advantage in their david-goliath match up against MTN – the market leader if they were to lead the Airtel onslaught.
4. After this article and recent news in Tanzania and if the move of buying Warid was for Airtel to solidify their numbers, grow their revenues, increase the brand’s market share in order to eventually offload the telecom to Vodacom/Vodafone while they focus on West Africa where its bloody, then they would need an agency that had the capacity to deliver on that promise – Scanad.
5.  In the worst case scenario, this account goes to a pitch in order to give the existing account holder (Moringa) a chance to compete. I personally think this would be the cruelest thing anyone could do; put your worst enemy in a pitch against Scanad because even hell won’t forgive you. Resources, tools, manpower and experience all seem like mundane things which are merely business jargon but nowhere else, and I mean NOWHERE, do they coalesce with such fervent ferocity to petrify and debilitate as when pitch fever is at fever pitch.

So that is how I see it and while I’m very very happy to be wrong you have to consider the possibility that I might not be. Any chess player will tell you “you don’t look at the now, you look at five moves ahead” So the market just got a bit tighter for the smaller agencies out there and since markets, like businesses are grown and shaped by the players in them it safe to assume that also much like in the jungle, we shall all eat when the lion is satisfied.