Safaricom will earn up to 13.27 percent annual interest from the sale 4G-enabled phones in Sh20 daily installments as it seeks to increase smart phone usage on its network.
The telco in partnership with Google seeks to offer one million affordable smartphones, with customers paying installments over a nine-month period, with the ultimate aim of switching about 4 million 2G and 3G phones to 4G.
“Together with our key partner Google, and specifically Android, we are aiming for an additional one million customers who will be able to access and leverage the power of the internet,” said Safaricom Chief Executive Officer Peter Ndegwa.
“The intention is to really target those who can’t afford the more expensive phones.”
He said the phone, which costs Sh5,999, can be bought with a Sh1,000 down payment, thereafter followed by a Sh20 daily payment until the phone is paid for.
Those paying in installments will pay a total of Sh6, 500, translating to an additional hire purchase cost of Sh500, which is equivalent to an annual interest of 13.27 percent.
At 13.27 percent, the annual interest is slightly higher than the average lending rate of 11.95 percent.
Eligibility of the financing plan for customers will be based on a credit score created by Safaricom and a subscriber will be required to have a history with Safaricom network going back at least one year.
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.
Data is one of Safaricom’s fastest growing revenue lines and it hopes that increased smartphone 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.
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 such as Facebook. Safaricom said earlier it would 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.