Switching off the grey handsets as planned by Kenya’s government could cost Safaricom, a leading cellular network provider, up to 5 percent of its revenue.
Over 900,000 of Safaricom’s subscribers use the “fake phones,” according to the firm’s general manager for business Peter Arina.
He said that the government’s move could affect the firm’s revenue stream in spades reducing it by some 3 or 5 percent.
Safaricom however remarks the loss is not as immense as previously anticipated. The firm has since initiated a number of media campaigns to sway its customers to use genuine phones. Arina expects the campaigns would drop the figure further before the set deadline.
Safaricom says it will uphold the rule of law and switch the counterfeit phones off its network once the government issues the directive.
A report reveals the government’s decision is prompted by the need to curb the loopholes in technology ahead of the country’s next general elections set for March next year.
According to Fredrick Obura of The Standard, a number of people used their phones to send hate-messages, which fueled the post-election violence following the 2007 General Elections. Some 1300 lives were lost from the violence.
HumanIPO last month reported that the government would switch off the imitation phones by September 30 after obtaining legal back up it had, at the outset, lacked.
The government on June 28 launched a 3-month campaign named “Pata Ukweli wa Mtambo” to educate Kenyans on the risks associated with using fake phones.
According to Kenya’s communication regulator the CCK, counterfeit handsets manufactured without regard to the recognized security standards may expose mobile money systems, such as Safaricom’s Mpesa, to risks.
CCK statistics show that about 3 million handsets in the Kenyan market are counterfeit. This translates to about 10 percent of all the active mobile phones in the country.
The phones have been hailed for their affordability in Africa, and Asia where 14 percent of the active phones are counterfeits. Part of the appeal is how they are often first to introduce features at a greatly reduced cost, such as dual SIM functionality that genuine phones may not have.
Manufacturers of the grey handsets imitate popular devices like the iPhone and Samsung Galaxy, and ship them at between $60 and $120, in that order.
The cost of manufacturing a counterfeit iPhone in China is around $300, which are later retailed at around $600, according to reports.
Arc Chart, a research firm, says an estimated 150 million counterfeit cellphones are estimated to be created for shipment to customers by 2013. The figure will form up to 7 percent of the total mobile phone market next year.
Regulation 24 of the Kenya Information and Communications (Importation, Type Approval and Distribution of Communications Equipment) Regulations 2010, requires all mobile phones to be type approved. Contravention of this statute attracts a fine not exceeding KSh300,000 or imprisonment for a term not exceeding three years or both, states the CCK.
If other African countries follow Kenya’s move to switch off the counterfeit phones, the phones’ market “could drop miserably.” Africa is a major expoter of the counterfeit phones from China.
The counterfeit phones employ fake International Mobile Equipment Identity (IMEI) numbers. Makers of these phones generally do not pay value-added taxes hence profit illegally from participation in the phone market.
