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SkyConnect Telecom was more than an ordinary business. It served as the country’s primary telecommunications provider; a company with deep roots; one that connected households and enabled office phone systems long before mobile devices became common. In the early 2000s, SkyConnect’s mobile division, OneWorld, held the burden of a monopoly.

However, SkyConnect’s management committed a significant error: they set the prices of their SIM cards similar to those of high-end products. In 2003, a OneWorld SIM card could exceed GHS50 ($40 back then). This pricing strategy kept out countless people. When mobile access was rapidly turning into an essential service, SkyConnect viewed it as something exclusive.

Following this, SunWave Mobile entered the scene in 2006, coming from a recent purchase within the Ghanaian telecom sector. SunWave possessed significant financial resources, a young and dynamic image, and a business approach centered around inclusivity. Their plan was straightforward: saturate the streets with inexpensive SIM cards. At bus terminals, music events, soccer matches, and shopping areas, SunWave representatives offered SIMs at low prices or even distributed them without charge. Where SkyConnect turned away one user, SunWave welcomed ten.

The Cost of Excluding versus Embracing Diversity

The choice made by SkyConnect to implement an expensive SIM card plan may initially seem logical. By setting a much higher price for usage, the firm benefited from substantial profit per SIM card sold.

This method provided them with a feeling of financial stability because their clients were mainly affluent individuals and companies capable of paying higher prices. Nevertheless, this approach was fundamentally restrictive.

Focusing exclusively on high-income customers restricted SkyConnect’s ability to reach a broader audience. The firm was unable to achieve growth, an essential factor in the telecom sector where building out infrastructure involves substantial and mostly static expenses. This includes towers, customer service hubs, engineering staff, and extensive national support systems—all of which demand considerable funding.

Due to having just a limited number of subscribers, these fixed expenses were distributed excessively, leading to reduced efficiency and competitiveness within the business. More significantly, SkyConnect failed to recognize the network effect—a significant cumulative benefit that arises as more individuals connect to the same platform. The smaller the user base, the less appealing the service was for prospective members.

On the contrary, SunWave completely reversed this approach by focusing on inclusivity rather than exclusivity. Rather than emphasizing high profits per SIM card, the company offered affordable pricing, drawing in millions of new customers from every economic background.

Initially, the profit from each single SIM card was modest, yet the large number of new customers generated a significantly bigger income stream. This enabled SunWave to achieve economies of scale, where the substantial fixed expenses associated with telecommunications infrastructure could now be spread over millions of users.

With an expanding customer base, the average cost per user decreased, leading to greater operational efficiency for the company. Significantly, SunWave leveraged the influence of the network effect. As additional individuals enrolled in the network, its value increased for both current and future users because friends, relatives, and colleagues were more likely to be found within the same platform.

This open-minded strategy went beyond increasing market share; it elevated SunWave to a leading position, demonstrating that lasting value in telecommunications comes not from high profits per user, but from widespread usage and steady expansion.

Act Two: Mobile Finance

By 2009, SunWave launched what would eventually prove to be its most significant offering: SunWave Wallet, a mobile financial solution that revolutionized the way individuals conducted transactions.

The real brilliance of this release lay in leveraging the extensive user base that SunWave had previously developed using its affordable SIM card approach. With millions of people already connected to the network, acceptance came effortlessly and smoothly.

In order to boost adoption, SunWave utilized its current airtime suppliers, enabling them to act simultaneously as mobile money representatives. This approach swiftly established an extensive distribution system while fostering confidence from users who had prior experience with these providers. The blend of ease of access and practicality led to SunWave Wallet becoming deeply integrated into the everyday routines of its clients—be it for transferring funds, settling expenses, or conducting transactions.

SkyConnect understood the significance of mobile money and tried to introduce its own digital wallet shortly thereafter. Nevertheless, its initiatives faced challenges due to unfavorable economic conditions. Having significantly fewer customers meant that the number of transactions was insufficient to produce substantial commission income for agents. Consequently, SkyConnect found it difficult to establish and maintain an effective agent system.

Consumers discovered the service more difficult to use, less flexible, and less beneficial than what SunWave provided. At the same time, SunWave Wallet expanded quickly, gaining widespread presence in various markets. As its number of users increased, so did transaction volumes, boosting agents’ income and enhancing the platform even more. This led to an example of a self-reinforcing cycle: SunWave grew larger, quicker, and more entrenched, whereas SkyConnect lagged increasingly behind.

Currently, SunWave holds more than 60% of the telecommunications market, leading not just in conventional voice and data offerings but also in the profitable and rapidly expanding mobile financial services sector. SkyConnect, even after several branding changes, continues to serve as an example within the industry; evidence that approaches focused solely on exclusivity may bring temporary benefits yet typically struggle when facing inclusive, expandable frameworks that leverage network and ecosystem strengths.

The Financial Perspective: Profits versus Expansion

The collapse of SkyConnect stemmed from a key strategic error: prioritizing profit protection over gaining market dominance. In financial terms, this approach focused on optimizing the Contribution Margin per Unit (CMU), setting elevated prices for SIM cards, data plans, and initial offerings to maximize revenue from every sale.

On the contrary, SunWave focused on maximizing Customer Lifetime Value (CLV). It reduced initial obstacles by offering budget-friendly SIM cards and rapidly growing its customer numbers, betting on expansion with confidence that financial success would come as the system developed.

The variation in strategies was notable. SkyConnect’s figures appeared strong in the near future, with high per-unit profit and more streamlined processes. However, the growth limit was narrow; the business had essentially ruled out most possible clients. In contrast, SunWave’s immediate profits were lower, yet each new customer brought increased worth over time.

With the rapid growth of its user numbers, the fixed expenses related to infrastructure and delivery were distributed among millions, transforming size into a strong market barrier and an economic benefit.

The Fundamental Reality: Size Devours Profit at Morning Meal

This example highlights a common principle in corporate strategy: size typically outweighs profit margins in rapidly expanding, cost-conscious markets. All companies, regardless of their sector—be it telecommunications, finance, or commerce—are confronted with the same critical choice:

• Generate greater revenue from a smaller number of clients (adopting a premium pricing, limited sales approach).
• Alternatively, take smaller amounts from a larger number of people (a low-cost, high-traffic approach).

SkyConnect chose the first path and ended up stuck in a narrowing market segment. SunWave opted for the second approach, developing an extensive and engaging network that laid the groundwork for innovative ventures such as SunWave Wallet, its digital payment solution. In Ghana, SunWave’s achievements demonstrated the strength of inclusivity: by keeping access costs low, it generated more than just clients—it fostered a complete financial system. The story of SkyConnect serves as a warning about how focusing solely on profits may prevent firms from recognizing the growing advantages of expansion.

The Instant of Insight: A SIM Is More Than a SIM

SkyConnect viewed the SIM as a commodity. SunWave considered it as a portal: for customers, access to information, transactions, and online services. That inexpensive yellow plastic card wasn’t merely a microchip; it formed the basis of an entire network.

Tips for New Businesses and Large Companies

Cost of Inclusivity, Not Exclusivity

In developing or cost-conscious markets, ease of access influences acceptance. Entrepreneurs ought to reduce initial hurdles, understanding that capturing market presence now leads to revenue opportunities later.

The Advantages of Legacy May Turn Into a Liability

Large companies frequently use past pricing strategies. However, sticking to “what was effective previously” may prevent executives from recognizing current market changes. Innovation typically arises from competitors who change the standards.

Think Beyond Unit Margins

Financial executives should not limit their attention to Contribution Margin per Unit. Actual profit frequently arises from economies of scale, wherein a broad customer base reduces fixed expenses and supports related ventures.

The Worth of Customer Loyalty Exceeds Initial Purchase Revenue

Companies succeed when they create strategies centered on long-term involvement instead of single purchases. A client acquired at low cost now might contribute income through various offerings later.

Create Infrastructure, Not Only Items

SunWave went beyond simply selling SIM cards, integrating mobile financial services into its network. Both startups and large companies should view expansion as a chance to create systems that generate benefits well past their original product.

Discussion Questions

1. Was the elevated SIM cost of SkyConnect a temporary approach to boost profit margins, or was it just inadequate understanding of the market?
2. In what way did SunWave’s low-price strategy lead to cost advantages through increased production volume?
3. How could you represent the Customer Lifetime Value (CLV) of a SIM card for SunWave in 2006 compared to 2010?
4. Was it possible for SkyConnect to adopt a mixed strategy (luxury plus mainstream market)?
5. In what situations should modern entrepreneurs focus more on gaining market dominance than achieving profits?

SOLUTIONS FROM THE PREVIOUS EPISODE’S CASE DISCUSSION:

1. From an economic perspective, how might time be considered a limited asset for a company?

Time can be compared to capital budgeting limitations — viewed as a limited, irreplaceable asset. Every individual within an organization possesses 8 hours daily, similar to how a business operates under a set financial allocation. Looking at it this way:

• Time = Capital Allocation

Top executives determine how to allocate available work hours (similar to financial resources) among different initiatives.

• Time Allocation = Resource Limitation

Similar to how a budget determines the number of projects that can be pursued, the finite amount of time available each day constrains the number of choices, discussions, and responsibilities a leader can manage efficiently.

• Time Return on Investment = Value Earned per Hour Spent

Tasks ought to be ordered based on anticipated returns per hour—much like capital investments are selected using IRR or NPV metrics.

Therefore, companies ought to approach time with seriousness rather than carelessness—viewing it as a collection of investments that requires constant optimization.

What dangers arise from concentrating too much power around one individual? In what ways does this influence the process of preparing for leadership transitions?

Excessive concentration of decision-making power (that is, when all matters rely on the CEO’s involvement or choices) creates substantial dangers:

Execution Constraints: Initiatives come to a halt when the leader is not available. This hinders creativity, causes postponements, and leads to team dissatisfaction.

Risk of Burnout: A leader may experience physical and psychological fatigue, which can gradually affect their decision-making abilities and work efficiency.

Knowledge Accumulation: When organizational expertise resides mainly within an individual’s mind, the organization’s collective memory becomes fragile—this poses a risk of failure during transitions.

Gaps in Succession Planning: Future leaders lack authority and preparation as they aren’t entrusted with genuine decision-making roles.

On the other hand, temporal decentralization fosters depth of capability. It promotes consistency, robustness, and self-sufficiency outside the scope of a single person.

What role do ideas such as delegation, contracting out, and mechanization play in balancing time spent versus benefits gained?

These techniques serve as approaches to enhance the return on time (ROT), much like improving return on investment.

Delegation involves shifting responsibilities from an experienced or higher-earning manager to a competent team member, allowing the latter to focus on activities with greater impact.

Subcontracting resembles equipment financing—access to knowledge and resources without ongoing expenses. It exchanges funds for time and proficiency.

Autonomous systems represent the pinnacle of efficiency—requiring no additional effort once established. They convert routine activities into self-operating functions.

Every approach needs to be assessed through time return on investment – “Is the time or money invested now leading to a significant increase in productivity down the line?”

If you held the position of COO at Theorhema, what further approaches would you introduce to enhance leadership effectiveness?

In my role as COO, I would introduce the following approaches:

Create a Time Dashboard: Monitor and classify the hours dedicated within the leadership team—strategic, administrative, urgent, and unproductive time. Leverage information to refine focus areas.

Establish a “No-Meeting Area” Rule: Set specific periods throughout the week as focused work times for leaders—safeguarding their peak moments of creativity and critical thinking.

Create a Leadership Development Initiative: Educate high-level supervisors on efficient delegation techniques, minimizing issues being escalated upwards and allowing top leaders to focus on strategic choices.

Implement Agile Teams: Form multidisciplinary agile groups that operate independently on critical projects, with limited top-level management input except when issues require higher-level intervention.

Implement a “Time ROI Assessment” within Project Proposals: Make it mandatory for all new initiatives to present not just financial return on investment but also the amount of executive time required and how the task corresponds with key strategic goals.

This process establishes an awareness of timing and safeguards the management level from unimportant interruptions.

From the perspective of corporate finance, can an individual’s time be assessed through net present value principles? If yes, which elements influence this assessment?

Indeed, human time can theoretically be assessed through NPV, particularly within knowledge-driven or service-based industries.

Formula (simplified):

Net Present Value of Time = Σ (Hourly Worth × Number of Hours Worked Each Period) / (1 + r)^t

Where:

Value Per Hour = Output each hour (monetary or strategic)

t = time intervals (years, quarters, months)

r = interest rate (modified according to risk, exhaustion, and depreciation of expertise)

Main Elements Influencing the Net Present Value Over Time:

Ability Level & Efficiency: Greater proficiency leads to higher output per hour, thereby enhancing the worth of time.

The Value of Abilities in the Market: Shortages and high demand (such as for technical abilities, legal knowledge) raise the current worth of these time investments.

Energy and Well-being: The worth of time may decrease due to exhaustion or suboptimal health, particularly among high-pressure leaders.

Age and Professional Level: Junior professionals might possess more potential high-impact working hours ahead; experienced professionals could have less time left, yet their contributions tend to carry greater value.

Efficiency Through Delegation: An individual who enhances their available time by leveraging others possesses a greater net present value of time compared to someone working independently.

By adopting this method, companies can purposefully assign valuable working hours to initiatives with significant influence, while steering clear of using top-level management time on tasks offering minimal returns.

The writer has a passion for Strategy, Leadership, and Finance, holds an MPhil in Finance from the University of Ghana Business School, is affiliated with the Institute of Chartered Accountants, Ghana, and serves as a part-time instructor at UGBS.

Email:
eymensah@gmail.com

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