HOW SAFARICOM DEALERS MAKE THE MILLIONS OR BILLIONS

 Safaricom being the largets telecommunications company in Kenya and also the most profitable company in the East African region, then Safaricom dealers must be making a kill by selling Safaricoms products. We all know that Safaricom has been announcing profits amounting to billions of shillings each financial year. I did'nt know how profitable it was to deal in this firms products until I stumbled upon the piece of information below from Kenyanentrepreneur.

"msaliti
May 5, 2009 at 2:22 am Good article but I’ll make a few corrections.The Safaricom Dealer business is a great model only that there are no new dealer licenses being issued. The number of dealers in the country is 400.
One needs to have at least 10 million shillings to operate with, with half that amount reserved for opening retail shops and the other half for working capital (buying stocks of airtime, phones, simex and data modems.
Dealers earn commissions from:

MPESA: This highly depends on the location of a dealers outlets. Urban areas with high population density are ideal and if a shop is doing 200 transactions a day, one could expect to make 100k easy from commissions payable. A dealer could also franchise other agents to open shops under the dealers name and collect 30% of the franchisees commissions every month for doing absolutely nothing.

299 or connection commission: for every sim card a dealer sells, they get a one off payment of Ksh 400 bob. On average, small to medium dealers connect 2,000-3,000 lines per month so they make 800k to 1.2M in connection commissions alone. Larger dealers with a country wide distribution network and presence connect more than 10,000 lines and above. Due to competition from other mobile phone operators and relatively high levels of penetration especially in urban areas, line connections have slowed down. As recently as 3 years ago, it was routine for dealers to connect 30,000 and upwards earning them at least 12 million per month.

Residual : This is the monthly commission paid on line usage. each dealer is allocated lines and once those lines are connected, the dealer earns 7.5% of the top up amount for life as long as that line is active. If a consumer tops up with 1000 bob a month, the dealer makes 75 bob from that line. Safaricom has 15 million users at last count and each of these users were connected to the network through their dealers.
Simex commission: if you loose your phone/line, you have to get a replacement for it. The dealer gets 50 bob for every line they replace.

Data commission: recently safaricom started selling mobile data modems. They are on the 3G network so the speeds are the best and the response is overwhelming. The initial price was 10,999 and has since dropped to 5,999. Dealers get 1,000 bob for every modem they sell. On top ot this, they earn 7.5% residual of the data usage.

There used to be only 18 dealers back in the year 2000. Then the number grew to 50 a year later. Trust me that all these dealers are multi millionaires now and there are even a few billionaires. Some of those early dealers have half a million lines to their name. So if dealer A has say 500,000 lines and assume an ARPU( average revenue per user) of 1000 bob a month that’s 500,000,000 in revenue for Safaricom. 7.5% of 500m is 37,500,000. One such dealer who i wont name and whose directors are multi- billionaires and own shares in every other listed company in Kenya. Ask people in the know they will verify this.Remember that the early users of mobile phones were people with cash and so these dealers hold most of the premium lines in the market.

A lot of the medium sized dealers have between 50k to 100k lines in the market with most earning residual incomes of between 1.5 to 7 million. Larger dealers, Mobicom, Samchi, Simba Telecom, Com21.. and the line earn 7-20 million with Mobicom being ahead of the pack.
Undoubtedly, Safaricom is the Microsoft of Kenya, it has created the most millionaires in the last 7 years. The best part is a lot of these dealers are fairly young guys. You go to a Safaricom dealer brief which is routinely held at the Laico regency and you will spot the best cars in town, Range Rovers, Mercs, Beemers, Hummers, Lexus’s, Toyota Land Cruisers…etc. Most of these guys are now in real estate with plenty owning office blocks and luxury apartments.

Safaicom dealers are fiercely loyal and protective of the company that feeds them. They are a motivated lot who do everything possible to make sure that they stay on top.No other mobile phone operator will dislodge this corporate behemoth from its market position thanks in part to their dealers. The gravy train is however over with 400 dealers competing for a piece of the pie. The last dealer licenses were issued in November 2006 and a lot of those dealers easily make just 500,000 in residual commission lone so they are not faring. That’s the dealer story from a safaricom insider."