Why This is Faiba’s War to Lose

Jamii Telecom recently launched FaibaMobile – a 4G only mobile services provider network. Unlike Equitel that’s focused on payments, FaibaMobile is all about data or what we’ve come to commonly refer as internet bundles.

And theirs is a serious foray; spectacular product packaging coupled with great pricing to boot. For example, Ksh 1,000 on their network gets you 25GB of 4G-only data while on Safaricom you only get 3GB mix-mash of 2G/3G/4G data. It gets even better, FaibaMobile promises free on-net calls so long as you have an active data bundle subscription.

There’s even a Fisi hour – a one hour per day plan where you get unlimited connectivity for just Ksh 150. Man, wish we had this in our university days – the things I’d have done with my Vaseline sampling HD self aggrandisement moments.

There are so many lessons to draw from the launch of FaibaMobile and I hope to reveal them in the next coming days but the thing that clearly stood out for me is their articulate comprehension of their competitive advantage. Their core business is fiber-based home and business internet connectivity solutions. They have aptly been selling these for the last 5 years consolidating their unmatched dominance and prowess while all along building a brand that we have all come to like, trust and adore.

While their product is very innovative it’s going to be their crazy low-cost pricing that is going to carry the day for them. When it comes to pricing wars, it is the person who can sustain the war the longest that will win. Certainly, there will be counter-offers from Safaricom and the rest probably even juicier than Faiba’s but whether they will be able to sustain them and still protect shareholders interest is questionable.

You see, FaibaMobile can afford to drop prices to the gutter only making just enough to cover their operational costs and they can sustain this the longest since they still have their core business, intact and growing, to keep them afloat for the treacherous days ahead unlike their public traded competitors.

Take for example Safaricom, it needs to keep posting spectacular growth year-on-year to maintain its momentum and satisfy shareholders expectations. It’s no doubt that they have been banking on both M-PESA and data to spur their growth. M-PESA has lots of potential but if only they can keep unlocking new ways for us to use it. It’s data though that, I believe, they have banked on majorly to bump their revenues trajectory. With a better and more innovative product from FaibaMobile, Safaricom will be forced to come up with a counter offer.

I do not see them getting us anything new and significantly better in the short-term so their only way out is to reduce their pricing. And that will be their Achilles heel. We all know what happened in 2011 during the Airtel-Safaricom pricing wars. For the first time in many years Safaricom’s profit took a beat and Bob Collymore had to take a stand to sustain the business by increasing their pricing. Safaricom survived, learnt their lessons and it will be foolhardy for them to go down that path once again.

There is a saying, ‘amateurs study tactics, armchair generals study strategy, but professionals study logistics’. And generally, it’s true. FaibaMobile will win this war because they can sustain it the longest.