Smartphones assembled at the Safaricom factory in Athi River will be up to 30 percent cheaper than imported ones, the giant telco has revealed.
Chief Executive at Safaricom Peter Ndegwa said the discounted pricing will help the telco to encourage increased uptake of 4G-enabled phones in the country and help grow revenues from the data business.
“Our objective with local assembly is to hit price points that allow customers to afford those phones rather than start to make lots of money from assembling phones,” Mr Ndegwa said in a newly published transcript from a call to investors in November.
“Our expectation is not to make significant amounts of money on the actual device assembly, but to benefit customers downstream, and therefore increase our ability to monetise that through our existing business.”
The phone assembly plant known as East Africa Device Assembly Kenya Limited, started operations last October and runs as a joint venture between Safaricom, TeleOne and Jamii Telkom.
The plant can produce about three million devices per year, with room to increase depending on demand. Mr Ndegwa says the plant also targets to export into the East African region and extend production to other devices.
“Beyond producing 4G-enabled devices, we can also start to assemble other devices, like the CPUs (Central Processing Units) that are used at home and a variety of other devices. So this could be quite versatile in the future,” said Mr Ndegwa.
Safaricom mobile data revenue grew 10.6 percent to Sh53.6 billion in the year ended March 2023, being 18.2 percent of service revenue. The number of smartphones on the Safaricom network grew by 10 percent to 20.3 million during this period, with 13.22 million supporting 4G.
Mobile data revenue grew by 12.5 percent to Sh29.6 billion in the half year ended September as the number of 4G devices grew by 18.8 percent to 14.39 million.
Mr Ndegwa expects to see sales of the devices start rising from this January and boost the number of devices sold in the fourth quarter ending March, given the lower price.
Chief financial officer at Safaricom-Dilip Pal says taxes had increased prices of smartphones by between 60 percent and 70 percent last year, hurting the telco’s ambition to double its 4G base from about 12 million to 20 million.
“The task for the second half is huge to enable this to happen. This is a hairy ambition, as we mentioned, but with the device assembly plant coming into play, we believe we'll be able to make up for some of the slowdowns that you have seen,” said Mr Dilip.
