Kenya: Tariff Wars Drive Up Subscriber Numbers but only 5% shift in Safaricom’s market share

Telecoms

The number of mobile phone subscribers in Kenya has grown to 22 million people, according to the Communications Commission of Kenya quarterly report for September 2010. The rise, attributed to price wars that pushed calling rates down, is the highest in the past three quarters. In June last year, Kenya had 20.1 million subscribers.

Analysts said subscriber numbers will continue to shoot up in coming months but will soon stagnate. "There is an increasing number of people in possession of multiple sim cards, but a number are likely to drop them and retain one," said Eric Musau, an analyst with African Alliance Kenya Securities.

The biggest player, Safaricom, however, lost part of its market share to rivals who were charging lower tariffs, dropping to 75.9 per cent from the previous quarter's 80.7 per cent.
Airtel, which has been reducing its rates over the past few months and now ranks among the cheapest calling and messaging tariffs in Kenya, saw its market share rise by 4.4 per cent -- the highest gain across the market over the review period.

Telkom Orange's market share also rose by 1.3 per cent while the tariff wars hived 0.7 per cent off Essar Telecom, which operates the Yu network. Subscribers spent a total of 6.63 billion minutes in making calls against 6.05 billion in the previous quarter.

This is on the back of low tariffs that service providers introduced and availability of phones. Analysts predict Safaricom will continue losing its market share and could reach as low as 71 per cent by next month, although the listed firm will still remain the leader in data provision.

"Safaricom contributes half of the data in the industry and can ride on its past investments," said Musau. In the long run, Safaricom is expected to benefit from its present settings including WiMAX protocol to provide fixed and mobile Internet access.
"Other players might not lose on voice but will be restrained on data provision, which is expensive to upgrade," added Musau.

During the quarter under review, the total number of broadband subscriptions rose to 84,726 from 18,626 in the previous quarter, representing 0.97 per cent of the total Internet subscriptions.

Total Internet subscriptions saw Safaricom secure first place at 92.18 per cent with 2,977,584 subscribers while rivals Airtel Kenya Ltd and Telkom Orange followed at 149,053 and 77,668 subscribers, garnering 4.61 and 2.4 per cent respectively. Other operators secured less than 1 per cent each according to CCK reports.

As the mobile subscriber numbers shot up, the period under review saw the fixed lines subscribers decline by 2.7 per cent from 234,522 to 228,391 lines. Fixed wireless service providers on the other hand recorded a 37.2 per cent decline from 225,592 in the previous period to 141,580.