Technology

WhatsApp hits telecom firms’ premium SMS business

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A deal has been signed to embed WhatsApp in new Nokia models. AFP

Local mobile subscribers are increasingly turning to free applications to send pictures and short videos in what has seen a drop in multimedia SMS services.

The free apps provided by third parties such as Whatsapp is denying telcos an opportunity to make money from multimedia SMS that attract higher charges if sent through the normal networks.

Safaricom, Airtel Kenya, Essar Kenya, and Telkom Kenya have expanded the capacity of their networks to handle the multimedia messages but subscribers are sending less of the heavy messages.

Statistics from the Communications Commission of Kenya (CCK) show that multimedia messages (MMS) dropped to 2.2 million in the three months to September compared to 2.5 million in the previous quarter.

“(The drop) could be as a result of competition from other similar services such as over-the-top messaging applications,” CCK said in the report.

“Moreover, the fact that MMS billing system depends on the number of kilobytes sent hence making it more costly may be contributing to the low uptake of the service.”

WhatsApp is the most successful of the apps allowing users to send MMS without paying the relatively higher fees charged by mobile operators.

Such apps are gaining popularity because while many telcos charge for individual texts, the app-based messages are sent via telcos’ generous or unlimited data plans.

This has limited the growth of MMS over the normal networks that are largely used for sending plain text-based messages that are charged at Sh1 each or less if bundles are offered.

Kenya’s largest telco Safaricom earned Sh6.4 billion from its SMS service in the half year ended September, a revenue segment that grew the fastest at 49 per cent.

READ: Safaricom SMS sales overtake rivals' voice units

The bulk of these messages are of the plain text variety, with telcos worldwide accusing the free apps of hurting their business model.

Telcos globally are losing over $10 billion in SMS revenue annually due to the emergence of the Internet-enabled apps, according to various ICT research firms.

Whatsapp, which has millions of users worldwide, has expanded its reach covering a wide variety of handsets from smartphones to feature handsets.

The firm last year signed a deal with Nokia to embed Whatsapp in new models of the Finnish phone manufacturer.