T Mobile Operations’ in Kenya, Africa, Business Proposal Example

Cell phones are spreading like wildfire in the third world countries as it is a rapid and portable means of communication. It does not keep a person tied down to a location like the former wired landlines. Moreover, wireless technology, modern multi tasking gadgets and the internet make other operations’ besides voice calls feasible on portable devices. Such operations’ include texting (SMS), video calls, internet banking, and a myriad other applications. In developed countries like US cellular operations’ are already heavily subsidized as competitors vie with each other to provide more services at cheaper rates. However, in developing countries like Kenya, there is enormous scope of ingress into this attractive market. T-Mobile, a leader in cellular operations’ within US possesses the technical infrastructure and the financial strength to expand beyond the shores of United States and Europe.

In Kenya, mobile phone services started in the year 1992 and Safaricom, Airtel and Zain are the major players’ in the industry (Kimutai, 2008). Stiff competition and government regulations have made calling tariffs in Kenya the lowest in East African countries (Vota, 2011). On an average, the calling rates within Kenya are KES* 3.5 (0.042 USD**) per minute, which is much below the regional average of KES 11 (0.13 USD) in neighboring countries. T mobile will have to consider operating within these rates if it enters the industry in Kenya.

At present, anybody travelling to a foreign company has the option to use international roaming facility on their native networks, which is a costly affair. Another alternative is to go for international prepaid cards bought in native country or buy a temporary prepaid SIM from the local providers of the country being visited. The last option invariably turns out to be the best in terms of cost, but the customer has to take a new number which is a disadvantage as he or she cannot be contacted by relatives, friends and business associates’, possessing the original cell phone number of the person. This makes room for cellular services’ providers to expand their operations on a global scale by reducing international roaming charges or reducing the cost by having their own networks within other countries.

As of now, T-mobile does not allow international roaming on its prepaid connections. GSM SIM cards for individual countries and multiple countries are however offered by some companies. The presently offered Kenya SIM card sold by BootsnAll Travel Company for international travelers includes a KSH 250 ($3.25 USD) airtime voucher (Web, undated). Additional airtime credit can be purchased by buying vouchers locally in Kenya at tobacco shops, convenience stores, gas stations and Safaricom shops. The vouchers are available in denominations of KSH 250 (30 Day expiration), KSH 500 (60 Day expiration), KSH 1000(120 Day expiration), KSH 2500(240 Day expiration), KSH 5000 (360 Day expiration) and KSH 10000 (485 Day expiration). Taking these figures into account, T-mobile can come up with a post paid plan which costs the customer less by charging a reasonable monthly amount determined by the average spent by existing customers’ on prepaid cards. The advantage of a post paid card will be that the customer will have to pay actual airtime charges only for the airtime availed of, and not wasting their money on prepaid cards which eventually expire even without use.

For the American customer, T-mobile either offers bundled annual plans or prepaid connections with the charges ranging from USD 15-70 for monthly plans and  USD 1-3 for ‘pay by the day’ plans on 4G networks. Comparing this with average Kenyan customer spending on cell phones, a figure of USD 10-50 per month can be envisaged as the amount of money a customer is able to spend and a plan will have to be developed accordingly. For a post paid plan, a minimal rate of USD 5 as monthly charges with the calling rate of KES 2-3 will be an attractive option for the Kenyan customer.

*KES = Kenyan Shilling

**USD = United States Dollar

 

 

References

Browse Plans, Retrieved January 31, 2011 from: http://prepaid-phones.t-mobile.com/prepaid-plans

Kenya SIM, Retrieved January 31, 2011 from: http://phonecard.bootsnall.com/kenya_sim.htm

Kimutai, C.(2008). Kenya: Mobile phone companies irk banking industry, Retrieved January 30, 2011 from: http://www.bizcommunity.com/Article/111/78/28324.html

Vota, W (2011). Kenya now has the cheapest mobile phone services in Africa – at a cost, Retrieved February 1, 2011 from: http://www.ictworks.org/network/ictworks-network/808