Safaricom wins increased voice traffic as rivals go for numbers
Safaricom CEO Bob Collymore plans to cut off the football, athletics and rugby federations, which have been marred by controversies and claims of corruption. FILE PHOTO |
Safaricom shrugged off the rush for new subscribers by mobile phone companies to increase its market share in the bread-and-butter voice segment as two of its rivals saw their customers talk less on their networks in the third quarter of last year.
The latest industry data shows that Safaricom increased the number of minutes spent on voice calls on its network from 5.3 billion to 6.2 billion during the period under review.
However, the number of subscribers dipped in the same period.
“Despite the significant dynamics in the market share based on subscription that has been witnessed in the industry over the last one year, market share based on traffic volumes is less dispersed among operators,” said the Communications Commission of Kenya in its sector update for the period between June and September last year.
The minutes gave Safaricom 88.2 per cent of the traffic market at seven billion minutes compared to 87.5 per cent in the period between April and June last year, according to the data released last Friday.
CCK interpreted the performance to mean that Safaricom was taking most of the revenue in the voice market.
“This would also be the case with respect to market share based on revenues as revenues are positively correlated to voice traffic,” the report read.
Traffic within the Airtel network reduced to 6.5 per cent from the previous 8.7 per cent, despite having increased its subscriber’s numbers by 557,177 within the quarter.
Telkom Orange had traffic within its network reduce to 0.6 per cent from the previous 0.7 per cent, despite adding 16,686 subscribers on its network.
Safaricom and Essar’s Yu added 593,177 and 46,742 new subscribers respectively, with the latter also increasing the traffic within its network from 2.9 per cent in the previous quarter to 4.5 per cent during the period under review. Safaricom attributed its increase in traffic to a one shilling promotion it had within the period starting from 10 p.m to 10 a.m.
“During the period under review, we had not increased our tariffs and we had a number of promotions going on,” said Nzioka Waita, Safaricom’s corporate affairs director. Industry analyst Vincent Mutavi, however, said other factors played a hand in increasing the traffic within the network, including the reduction in mobile phone charges by half from Sh6 per minute at the beginning of 2010 to Sh3 per minute at the end of that year. The price cuts, he said, led to an increase in average use by subscribers from 82 minutes to 89 minutes.
Number of subscribers
“The other factor could be the general increase in the number of subscribers,” said Mr Mutavi. The data showed that the number of subscribers increased from 25 million to 26 million.
Telkom Kenya Chief executive officer Michael Ghossein said he could not immediately comment on the figures. “We submitted our figures on traffic within our network to CCK, but I cannot comment on the report because I have not studied it,” said Mr Ghossein. However, he questioned the credibility of the report. “CCK should be capturing active subscribers.
I believe the country has 13 million active mobile subscribers and not the 26 million indicated in the report,” said Mr Ghossein.
On its part, Airtel said at the moment it is driving up its subscriber base numbers, which in future it hopes will boost its revenue.
“We are pleased with the positive growth in our customer numbers during this period. It demonstrates the confidence and trust that Kenyans have put in the Airtel brand for which we are truly grateful,”said Shivan Bhargava, chief operating officer at Airtel Kenya.
“We will continue to offer more innovative products and services including the increased depth of Airtel Money and the introduction of our world class 3G HSPA this Quarter,” he added.
Yu could not be reached for comment.
Both Airtel and Orange subscribers made more calls to their rivals’ networks within the same period than to their network meaning their rivals gained additional revenue from the Mobile Termination Rate — the fee operators levy each other to complete calls.
The current termination rate stands at Sh2.21 per call after President Kibaki ordered last year that the rates be held at that level to protect the sustainability of the mobile phone sector.
The rates would have dropped to Sh1.40 in the quarter under review under a CCK timetable that started with the reduction from Sh4.20 in July 2010, ushering the drop in tariffs for off-net calls witnessed for most of last year.
Under the existing arrangement, operators offset their dues to each other, meaning the network with more outgoing traffic pays operators receiving its calls.
This has seen small operators lobby to have the rate drop to Sh1.10 to cushion them against high termination expenses.
Within the period, Safaricom made 6.1 billion minutes on net calls and 158 million minutes in calls to other networks.
Airtel, on the other hand, handled 197 million minutes within its network and 267 million minutes to other networks, while orange made 14 million minutes within the network, half the traffic from it to its rivals. Calls within the Yu network in the period stood at 260 million against 63 million to other networks.
He, however, added that the manner in which the report has been done not capture the real situation in the market especially on the number of mobile subscribers.
A report released by the Prime Minister’s office last year showed that besides Safaricom, the three other operators, Airtel, Yu and Orange were in the red.
