Safaricom turns to gadget sales to cut reliance on voice

Safaricom is seeking to double the sale of handsets from its retail network in a drive to reduce reliance on voice business as a profit driver.

The firm sold about a one million handsets, modems and laptops that earned it Sh6.8 billion in the year to March 2012, accounting for 6.4 per cent of its total sales, up from Sh6.6 billion a year earlier.

Safaricom is targeting to sell smart phones at a subsidised price to increase the share of its subscribers hooked onto its Internet services, ultimately boosting data sales.

Voice accounted for 64.4 per cent of Safaricom’s revenues in the year to March 2012 and the firm is racing to shore up its other business units, including SMS, M-Pesa and data.

The operator on Monday launched the sale of the Samsung S4 smartphone, which is the latest offering by the South Korean giant, in line with the quest to boost data use and increase earnings from its gadget division.

“We intend to double the number of terminals we sell with the main focus of enabling us drive more usage of our core products, which are voice and data,” said Janet Atika, head of sales at Safaricom.

“We are targeting a growing middle class, a more aspiration customer and high spenders who are all contributing to the increasing growth in the high end phone market,” added Ms Atika.

The Samsung S4, which was launched in April 24, will be officially unveiled by the Korean firm Tuesday in Nairobi, but  Safaricom had pre-ordered some sets at a subsidised rate.

Safaricom said 200 of its customers made deposits for the Samsung S4 and will get the phone at Sh57, 000 instead of the recommended retail price of Sh64, 999.

Kenya has many lower-end users who only make calls and send text messages, but its increasingly young and tech-savvy population is buying tablet computers and smartphones that are increasing data usage.

Data has thus emerged as a fertile ground for the operators who have upgraded their networks to support high-speed wireless services.

Since the onset of a voice price war in 2010 that cut airtime prices by 50 per cent, the telecom company has been keen to reduce its reliance on the volatile voice business with the focus on M-Pesa, SMS and Internet.

Voice generated Sh68 billion of the Sh107 billion revenues the operator posted last year, accounting for 64 per cent of the sales, down from 85 per cent in 2010.

M-Pesa brought in Sh16.9 billion, with the Internet and SMS having generated combined sales of Sh6.5 billion.

Safaricom is expected to post a double-digit growth in profits for the year ended March next Tuesday and its share has more than doubled over the past year to Sh7.10 apiece.