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Is K2 Telecom on Life Support? Why the Telecom May Soon Close Shop.



K2 telecom

By Moses Kaketo

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Think about it, if you were given Ugx 10 billion today, what would you do with it? Become a multi-millionaire in a matter of time? Well, you could fail as well.

The launch of K2 telecom promised a new era. Being attached to the Buganda Kingdom, with over eight (8) million Baganda, there was no reason for failing to penetrate the market instantly.

To break-even, a telecom in Uganda needs just one million active users on voice. K2 telecom’s customer acquisition target was just that. A feat that was easy to attain within just the first year.

The telecom was launched on 31st December 2012 by Kabaka Ronald Muwenda Mutebi at the Kingdom’s annual end of the year event-Enkuka. In attendance were thousands of loyal Buganda Kingdom subjects, friends and well-wishers. It was a perfect moment and a huge endorsement boost to the new telecom by the Kingdom.

Three years later, the network is slowly disappearing. The network’s silence is too loud for folks that follow the telecom industry keenly.

K2 operates as Mobile Virtual Network Operator (MVNO). It depends on other networks to deliver telecom services. This kind of license or business model significantly constrains the operator, as they have to cede a huge chunk of their revenues to the partnering telecom. It is like an insurance company paying over 80% of their collected premiums to a re-insure.

Independent information indicates that K2 telecom is struggling due to cash flow challenges. Market reports show the company has just 200,000 customers, which is below the one million needed to break-even in this highly competitive market. The company’s woes stem from Airtel’s concerted efforts to create partnerships with the Buganda Kingdom; which has seen the company associate more with the Kingdom than K2. Thanks to more value addition by Airtel compared to K2, the latter has not registered many subscribers as anticipated.

Even then, K2’s 200,000 subscribers are not all active. Over 100,000 – that is a 50% of all subscribers, are said to be dormant – have not made calls in the last 90 days. This, coupled with higher churn rates, makes the business difficult. All efforts to recover clients using consistent on the powerful kingdom radio CBS 88.8 have been futile. The challenge has been that most distributors and retailers are not restocking K2 products, as they are not fast moving, which means low returns for the distributors.

With slow business for K2 products and services, many of the agents the network had recruited have closed shop, as they do not have sufficient monthly revenues to meet rentals and other running costs. The few that our reporter talked too, disclosed were in the process of closing shop, unless K2 is able to support them so as to remain open – something that is unlikely to happen considering such a model does not exist in telecom distribution, and K2 is also financially squeezed.

During market research for this article, we visited a number of towns within Buganda. Unfortunately, in this region where the network’s focus would be, neither agents nor products were visible. Findings from the field reveal that K2 distribution sales points in Kireka, Luwero, Wobulenzi, Bweyogerere, Mukono, and Mityana have since closed down.

In Masaka, while K2 telecom shop remains open, ‘‘business is too slow’’, according to a shop attendant who preferred to remain anonymous. On the other hand, MTN and Airtel shops next to the K2 outlet where very busy throughout the time of the visit.

Dead social media

Despite having 9,832 Facebook likes, the network’s page was last updated on 2nd February 2015. Enquires from existing and potential customers have been ignored. On December 27th 2014 Jafia Shacool, K2 customer posted on network’s Page: ‘‘Why don’t you have customer care on your page?”. It is nine months later; his complaint still remains unattended to.

How K2 lost it

Largely, a 21st century phenomenon, MVNO’s have taken over the market especially in developed world. In some European countries, MVNO’s control between 10 and 40 percent of the market.

According to analysts, K2 had all it takes to survive and command reasonable market share in Uganda. But lack of clear strategy and understanding of how MVNO’s operates is failing the network. Based on extensive market research and experience working on a variety of MVNO, experts identify key success factors for MVNO’s which K2 could have missed. Successful MVNO’s often survive by identifying a niche market, use conventional business model to attract this market.

With an estimated nine million Baganda, by employing a clear set of aggressive segment marketing strategy and specific distribution tactics, K2 was destined for better future. If they had focused on tapping into this customer segment, by offering customized solutions, like Kingdom ringtones, and special culture education, it could have done some magic.

The same model could have been rolled to Bunyoro and Tooro, and the results could have been tremendous. Such a niche is so loyal.

Industry experts say, if K2 had clear strategy for the launch, everyone who attended the Enkuka –these are loyal Baganda, would have been given free Sim card or even better subsidized cheaper phones.

In just one day, the network would have had at least 100,000 people on her network. That would have been a great start. This was missed opportunity.

Operational excellence

According to research, 75 to 85 percent of MVNO cost structures involve variable charges like wholesale airtime costs and customer acquisitions expenses. Successful MVNO, need to minimize customer acquisition and retention costs. K2 got this wrong from day one.

To portray corporate image, K2 chose an upscale office on Clement Hill next to MTN and former Warid head offices. This pushed their fixed costs budget up to the roof.

Why didn’t they locate their head offices within Bulange?

They got to learn of this late and shifted to Katwe, Muganziwanza building, which is owned by the Buganda Kingdom.

Successful MVNO’s occasionally depend on their existing customers to take on certain aspects of their operators such as sales, customer service and marketing.

This in effect cuts down on costs. K2 chose to use same methods like other teleco’s. In return, these ‘agents’ or network’s users receive a remuneration in form of commission.

For example, one of the MVNO in the United Kingdom is estimated to have paid UK 3 million pounds to its customers for job well done. Therefore, company needed only 28 full time employees.

According to industry analysts, it’s not too late for K2. They can rebrand and re-launch at this year’s Enkuka.

About the author:

Moses Kaketo works with Summit Business Review Magazine, holds a Master’s Degree in Business Administration from Uganda Management Institute, A professional diploma in marketing (CIM) and bachelor’s degree in Education. He sees business in everything. He loves writing business news, reviews and analyses.

Twitter: @mkaketo

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Local Business

Kabira Country Club to host Easter Carnival



By Our Reporter

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The Easter holiday is upon us. In the spirit of Easter celebration, Kabira Country Club is organizing a mega Easter Carnival slated for Saturday, April 13th.

Dubbed “Kabira Easter market”, it will be a fun-filled affair featuring an artisan market with over 100 vendors and lots of entertainment including a live band. There will also be plenty of kids’ activities like face painting, egg treasure hunt, and full access to a playground fitted with jumping castles, swings and more games.

The event is free entrance and gates will be opened mid-morning.

With 95 luxurious guest-rooms and exceptional amenities, Kabira Country Club offers a perfect getaway for relaxation.

“Whether your stay is for business or pleasure, Kabira Country Club has all you could possibly need in a modern, comfortable hotel, situated in a wonderful location.” Vismay Maniyar, the general manager of Kabira Country Club noted.

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Coca-Cola enabling access to safe drinking water for refugees in Uganda



Mark Hoogendam General Manager UBC - South Sudan Coca Cola poses for a photo with the local community.

Mark Hoogendam, General Manager UBC – South Sudan Coca Cola poses for a photo with the local community.

By Our Reporter

Equatorial Coca-Cola Bottling Company remains committed to the communities of the countries where it operates through a newly launched collaboration with Spain for UNHCR (The United Nations Refugee Agency). The project, known as “Water Assistance for South Sudanese Refugees in Uganda” is designed to ensure access to safe drinking water for South-Sudanese refugees in Uganda.

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Guaranteeing access to clean water and sanitation services for South Sudanese refugees in Uganda is the driving priority behind the collaboration between Equatorial Coca-Cola Bottling Company and Spain for UNHCR. The project will be carried out in the settlement of Bidibidi, located in the district of Yumbe, west of the Nile River. As the largest camp for refugees from South Sudan, it covers approximately 234 square kilometers.

UNHCR and Equatorial Coca-Cola Bottling Company seek to improve the water supply situation at the Bidibidi refugee camp settlement through installing a hybrid system that will ease extraction from one of the existing wells. In total, there are two functional hand pumps, one of them being this deep well where pumping water requires the strength of minimum two adults, meaning the process is strenuous and difficult. This new system will provide clean water to more than 6.500 people, covering a distance of 9km radius from the water site and creating 7 different distribution points, it is estimated that the recommended availability of 20L per person per day when the site is fully operating will be achieved.

Having access to clean water and sanitation infrastructure is key to ensure a healthy life. Additionally, clean water availability has the power to encourage gender equality, further education and generate income for people who have been forced to flee their homes as a result of war, persecution and violence.

Yet millions of people across the world are deprived of this essential need. The issue is particularly problematic in Southern Africa. The United Nations estimates that Sub-Saharan Africa alone must spend up to 40 billion hours per day collecting water.

The United Nations has also resolved that all refugees or asylum seekers must have access to safe drinking water. In Uganda, one of the largest countries of asylum in the world, 65.5% of over 1.22 million refugees come from South Sudan, where the conflict started in 2013 caused a massive exodus of civilians to neighboring countries.

Insufficient water supply in the Bidibidi settlement has led refugees to resort to collecting water from unprotected sources, including open ponds, streams and rivers, to meet domestic needs. Not only does this raise severe health concerns, but it also instigates gender issues and hinders education because women and children are generally the ones commissioned by their
families to fulfill the arduous task of extracting water from a deep well.

Other sources of clean water include tank trucks able to supply 40 m3 of water a day, a measure that is both expensive and unsustainable.

“Equatorial Coca-Cola has a long history supporting South Sudanese communities, we began our operations in the country in 2012, and we continue supporting them wherever they are, not only by providing beverages but with our community projects.” Mark Jan Hoogendam, General Manager, Equatorial Coca-Cola in South Sudan (UBC).

“Coca-Cola Beverages Africa in Uganda is honored to join Equatorial Coca-Cola Bottling Company as they commission their collaboration with Spain for UNHCR in an initiative dubbed “Water Assistance for South Sudanese Refugees in Uganda” – Maureen Kyomuhendo, Public Affairs & Communications Manager, Coca-Cola Beverages Africa in Uganda.

Coca-Cola Beverages Africa in Uganda is already working with REHORE, a local NGO in Uganda to empower female refugees in three camps including Bidibidi under the Coca-Cola 5 by 20 program.

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Local Business

MTN Foundation sponsors corrective surgery for children with disabilities at CoRSU Hospital



Acting MTN Uganda CEO Mr. Gordian Kyomukama (L) hands over a UGX 184m cheque to improve the quality of life for children with disabilities to CoRSU Hospital CEO Dr. Davide Naggi

Acting MTN Uganda CEO Mr. Gordian Kyomukama (L) hands over a UGX 184m cheque to improve the quality of life for children with disabilities to CoRSU Hospital CEO Dr. Davide Naggi.

By Our Reporter

Over 80 children and youth with disabilities are set to benefit from free corrective surgery thanks to a partnership recently signed between MTN Foundation and Comprehensive Rehabilitation Services for People with Disability in Uganda (CoRSU).

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The initial phase of this project, worth over Ugshs 184 million, aims to improve the quality of life for children with disabilities in Uganda, and will see beneficiaries consisting of 60 children and 20 youth drawn from different parts of the country, starting this April.

CoRSU is a private local NGO located in Kisubi, founded in 2006 and officially opened in 2009 with a mandate to prevent disability and to restore ability. It has as such made a tremendous contribution towards improved quality of life for children with disabilities through the provision of quality Orthopaedic and Plastic surgery, assistive devices, therapy and Community Based Rehabilitation (CBR). Each year, CoRSU provides surgery to thousands of children and adults to correct or reduce their impairment.

“The MTN Foundation and CoRSU partnership speaks into our consistent mandate which is to make the lives of our customers brighter. To regain the ability of mobility is a beautiful gift especially to our youngsters who previously may have had their hopes and dreams shattered by previous circumstances. By removing the barriers that children with disabilities face on a daily basis, we can enable them to realise their full potential,” said the Acting CEO MTN Uganda, Mr. Gordian Kyomukama.

According to a 2014 UNICEF report on The Situational Analysis on Children with Disabilities, quoting the 2002 Uganda Census findings by Uganda Bureau of Statistics, 19% of children with disabilities aged seven to sixteen have never been to school and 39% of those aged 17 to 22 had completed fewer than four years of education. With limited access to education, children with disabilities face an added disadvantage of illiteracy, which can further affect their quality of life.

The CEO, CoRSU Hospital, Dr. Davide Naggi commended the MTN Foundation for the partnership. “We thank MTN Foundation for coming to the rescue of the future leaders of this nation. Children with disabilities are vulnerable but also an important and valuable part of our society. They are often marginalized, but thanks to the support from partners such as the MTN Foundation, we are able to redefine that for the better, by providing these young souls equal opportunities at life and restoring their hope for a brighter future.”

The one-year partnership between the MTN Foundation and CoRSU will also see MTN staff visit the hospital from time to time to spend time with the children, engage in community work and donate various items for the children’s comfort.

The MTN Uganda Foundation is a non-profit entity that was inaugurated in July 2007 as a vehicle through which MTN Uganda implements its corporate social investments (CSI). The main objective of the foundation is to improve the quality of life in communities across the country by supporting and implementing sustainable projects in Education, Health and other National Priorities.

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