CA: Airtel users speak 3 times longer than Safaricom

Airtel Kenya subscribers speak nearly three times more on their mobile phones than Safaricom #ticker:SCOM users on the back of the telecom operator’s cheaper call tariffs.

The Communications Authority of Kenya (CA) says that on average Airtel users calls last 3.30 minutes within network traffic compared to Safaricom’s 1.3 and 1.9 for Telkom Kenya subscribers.

Airtel subscribers’ calls to rival networks are longer at one minute on average compared to Safaricom’s traffic to competition that lasts 0.9 minutes.

The change comes at a period when Airtel has sustained an aggressive hunt for subscribers, cutting Safaricom’s market share on call minutes to 56.4 percent in June from 79.6 percent in June 2017.

“This is attributed to the fact that operators are offering their subscribers lower calling rates or free calls within the network,” says CA in its latest market share reports.

“Airtel has been offering luctrative voice bundles for on net calls where its customers are able to subscribe for Sh10 for 24 hours, Sh50 for seven days and Sh150 for a month.”

Safaricom introduced a tariff in October that allows subscribers pay Sh2.86 for a minute of talk time across all networks, down from Sh4.30 a minute, by offering extra free airtime.

Despite the drop, Airtel call costs are still lower compared to the new Safaricom rates.

Airtel subscriber market share is lower than its call traffic market share, backing the trend where its subscribers call longer compared to rival firms.

Its subscriber market share stood at 24.6 percent in September while the firm’s voice traffic stake was at 40.3 percent.

Both Safaricom and Airtel have been increasing their quarterly user numbers, but Airtel has reported faster growth in subscribers.

However, investors have shrugged off the developments with Safaricom’s share price on the Nairobi Securities Exchange (NSE) rising 39 percent this year to trade at Sh31.45, riding on the firm’s rising profitability as Airtel remains in losses.

The shifting market share numbers have eased Airtel Kenya’s losses with the firm having reported $27.43 million (Sh2.77 billion) loss last year, down from $59.5 million (Sh6 billion) loss in 2017.

Safaricom’s net profit for the year to March stood at Sh63.3billion, up from Sh55.2 billion a year earlier, underlining its dominance of Kenya’s telecom market.

The Competition Authority of Kenya (CAK) in December approved the planned merger between Airtel Kenya and Telkom Kenya in a deal its promoters say could challenge market leader Safaricom’s dominance.

Telkom Kenya’s voice traffic market share was 3.1 percent in September. Telkom Kenya lost 675, 000 subscribers in three months to September, cutting its stake to 6.7 percent from 8.1 percent in June.

Safaricom in October introduced a new voice and data tariff that cut peak time call costs by a third - or Sh1.44 a minute - and also gave subscribers a chance to buy internet bundles without expiry dates in changes aimed at curbing rival Airtel’s market share growth.

The telecoms operator said that subscribers opting for the no-expiry tariff plan will get an extra 50 percent airtime, an offer that lowered the cost of talk time.

The changes say subscribers pay Sh2.86 for a minute of talk time across all networks, down from Sh4.30 a minute, reflecting a 33 percent drop.

The new plan gives subscribers the option of buying bundles that have no expiry dates, saving users from losses that have seen the three mobile phone operators sued.

But the CA is yet to release data running to December to show whether Safaricom’s tariff changes have influenced market changes.