Safaricom starts Sh20 a day loan for buying smartphones

Safaricom #ticker:SCOM will Tuesday kick off the sale of smartphones on credit to its subscribers who will make daily payments of as little as Sh20 a day for up to a year as the firm seeks to ramp up data revenues.

The telco is partnering with Google to offer one million affordable smartphones.

Safaricom is aiming to rev up its data business to offset sluggish growth in mobile calls, where it has seen a small revenue growth due to saturation, forcing the firm to turn to M-Pesa and internet to power future growth.

“Cost of devices should no longer be an impediment. We are launching an innovative device financing plan dubbed dubbed Lipa Mdogo Mdogo that will give customers still using feature phones an opportunity to own a 4G- enabled device by paying only Sh20 a day,” said Safaricom chief executive Peter Ndegwa said in opinion published in the Business Daily.

The offer will be available for all phones and the daily repayments will increase if subscribers go for high value smartphones as Safaricom seeks to eventually convert about 4 million 2G and 3G-enabled phones to 4G.

“Democratising data implies facilitating its universal access. It requires continually working towards bridging the digital divide,” said Mr Ndegwa.

Data is one of Safaricom’s fastest growing revenue lines and it hopes that increased smart phone usage will boost it further.

Revenue from mobile data, where Safaricom has been aggressively fighting for market share by offering internet bundles without expiry, rose 12.1 percent to Sh40.7 billion, after recording 21 percent growth in the second half ended March.

“Mama Mbogas are also using 4G enabled devices to send photos and videos of their produce to customers, taking orders online and delivering using boda-boda riders,” said Mr Ndegwa.

“It is an innovative way of allowing customers to get a device that they would otherwise not be able to afford. If you have an app, you can’t use it on a 2G phone.”

Safaricom has experienced an increase in data traffic as people work from home and students turn to e-learning services.

The firm in April said mobile phone data usage had grown by 35 percent as users streamed movies on platforms like Netflix, worked from home and used social media sites like Facebook.

Safaricom said earlier it will this year launch Kenya’s first fifth-generation (5G) mobile internet services targeting major urban centres, making it the inaugural operator to offer commercial and superfast services in the region.

The 5G launch will follow the December 2015 unveiling of the 4G network, which has helped Safaricom grow its revenues from data to Sh40.67 billion as at March this year from Sh9.3 billion in 2014.

The firm had completed testing and trials for the upgraded network as the company seeks to capitalise on burgeoning mobile Internet use in the country.

The 5G service is a central part of its attempts to further expand its data business to counter slower growth in voice calls revenue.