Economy

Value of unused Safaricom airtime, data hits Sh5.7bn

safcom

A man makes a phone call. FILE PHOTO | NMG

Safaricom #ticker:SCOM customers accumulated Sh5.7 billion worth of unused airtime, SMS and data in the year ended March after the telco removed expiry dates on its services.

This marks a 24 percent jump from Sh4.6 billion worth of unused telecoms services purchased in the previous year.

Safaricom says the value of unused airtime rose to Sh2.6 billion from Sh2.5 billion while unutilised resources — comprising bundles of airtime, SMS and data— increased to Sh3.1 billion from Sh2.1 billion.

“During the year the group introduced the no-expiry products under the Neo theme to ensure customers get value for what they buy,” the company says in its latest annual report.

“As a result, the value of unutilised resources increased… as subscriber liability as at 31 March 2021 went up in line with IFRS 15 revenue recognition requirements.”

The telco records revenue from customers once they consume the purchased airtime, SMS or data bundles.

Before the resources are utilised, they are recorded as liabilities but the company does not make any payments since the services remain on the books or are reduced as customers consume them.

The introduction of no-expiry services previously helped Safaricom to supercharge sales since customers had a fixed timeline within which to spend the services –a day, week or month— before they expired.

Customers buying no-expiry services have the option of leaving them unused for extended periods of time. Safaricom also offers services with expiry dates and lures customers to these options with more generous data, more SMS or longer talking time.

The value of Safaricom’s loyalty points (Bonga) also rose to Sh4.2 billion in the review period from Sh3.9 billion a year earlier despite the telco offering more options to redeem them, including donating them to other subscribers.

The company in October 2019 rolled out the non-expiry airtime and data bundles following a public outcry that had ended up in court.

Lawyer and ICT practitioner Adrian Kamotho in October 2019 sued telecoms operators Safaricom, Airtel and Telkom Kenya over the expiry of data and loss of unused Internet bundles.

The three telcos responded by introducing non-expiry airtime and data bundles even before the case had been decided.

Demand for non-expiring products was also seen in South Africa where the telecoms regulator in February issued new rules that require operators to allow customers to roll over unused data.

Vodacom, Safaricom’s parent firm, was forced to roll over expiring data following outrage from consumers.

Safaricom’s net earnings declined 6.8 percent to Sh68.6 billion in the review period, after the coronavirus crisis hit revenue from mobile financial service M-Pesa and calls.

M-Pesa’s revenue declined 2.1 percent to Sh82.64 billion while that of voice fell 4.6 percent to Sh82.55 billion.

Safaricom acknowledges that online messaging applications such as WhatsApp are posing competition to traditional voice and SMs business.

“Voice calling and SMS messaging have been declining for years worldwide due to mainstream adoption of messaging apps such as WhatsApp, which offer more features at lower prices, such that voice and SMS services now account for 38.4 percent of service revenue,” says the telco.