Wednesday, August 1, 2018

How Airtel has been chipping away at Safaricom’s turf

Mast With its aggressive marketing of data bundles under the tag of The Smartphone Network, Airtel has gained 4.6 percentage points to hit 23.1 per cent of market share. FILE PHOTO | NMG 
Airtel Kenya still plays second fiddle to giant telco Safaricom but it is counting on sustained humble gains in its market share to take the turf war to rivals in the telecommunications industry.
In the latest industry report by the Communications Authority of Kenya (CA), Airtel emerged the biggest winner gaining 2.7 percentage points to lift its market share to 19.7 per cent as both Safaricom and Telkom Kenya registered drops.
The latest gain means that between the fourth quarter of 2016-2017 and the second quarter of 2017-2018, Airtel has gained market share by 4.4 percentage points to hit 19.7 per cent while Safaricom has lost 5.6 percentage points to close at 67 per cent.
This was thanks to Airtel signing up new customers and making inroads in voice, data and short message services at the expense of Safaricom and Telkom Kenya.
A case in point is the period between January and March this year where Airtel's mobile subscription grew by 18.2 per cent to 8.7 million from 7.3 million. In the voice service, Airtel has now hit a market share of 28.7 per cent, more than double the 13.5 per cent it held in the second quarter of 2016-2017.
With a 6.7 percentage point gain booked in the quarter under review, Airtel has reduced Safaricom’s share in voice business to 66.5 per cent. This is the lowest for Safaricom since the fourth quarter of 2014-2015 when it’s market share was 68.8 per cent before hitting a high of 80.6 per cent in 2016.
Airtel recorded a massive 44 per cent rise in local voice traffic to 3.6 billion minutes from 2.5 billion minutes recorded during the previous quarter as that of Safaricom dropped.
“This increase is attributed to the additional 1.3 million mobile subscriptions gained by the operator during the period under review,” observed the CA.
Telkom Kenya Limited recorded a 4.4 per cent decline in local mobile voice traffic to 581.7 million minutes leading to a drop in its voice market share from 5.2 per cent to 4.6 per cent.
With its aggressive marketing of data bundles under the tag of The Smartphone Network, Airtel has gained 4.6 percentage points to hit 23.1 per cent of market share.
During this period, Safaricom lost its share by 4.4 percentage points to 68.4 per cent, being the lowest share since September 2016. That of Telkom Kenya dropped from 7.8 per cent to 7.6 per cent.
The competition could hot up further following Airtel’s rollout of fourth-generation (4G) Internet services in May to match Safaricom and Telcom which launched theirs in 2014 and June last year respectively.
“We believe we have launched our 4G service at the most opportune time, especially now that many customers have access to more 4G enabled handsets and devices,” CEO Prasanta Das Sarma said during the launch.
The firm then rolled out a promotional offer for its customers to upgrade to 4G by giving them free 2GB to sample the experience.
During the quarter under review, total data and Internet subscriptions grew by 8.2 per cent to record 36.1 million. According to the CA, there is more room for growth of the data market due to rising demand and uptake of smartphones in Kenya.
“Smartphones are largely used to access video on demand, online markets, games, music, news and social media sites. However, they are an increasingly essential tool to access financial products and a huge variety of useful services,” observed the CA.
Further, the CA sees the increased access to and use of Internet services being driven by the growing e-commerce in the country.
According to the CA many subscribers are turning to Over the Top (OTT) services such as Facebook, WhatsApp, Snapchat and Twitter, leading to reduced popularity of short text message service (SMS).
However, Airtel defied this trend in the three months to March to grow the number of SMSes send through its network even as Safaricom and Telkom Kenya recorded a drop. SMS traffic originating from its network grew by 18.2 per cent to 659.2 million messages in the period under review from 557.9 million, resulting in a market gain of 4.4 per cent.
Safaricom saw a 17.54 per cent decline in SMSes from its network to 14.1 billion resulting in a drop in its market share from 96.3 per cent to 94.9 per cent, its lowest share since September 2016.
Airtel has been aggressive in marketing its services, allowing customers to top up airtime from Safaricom’s M-Pesa courtesy of its partnership with Pesapal, a digital payment solution. According to the communications watchdog, the shift in market share is a result of many variables which may require further analysis.
“The authority is observing this trend and can only be in a position to provide an answer once this analysis has been completed,”the CA said in an emailed response.
In 2010, ICT sector regulations were reviewed tilting the landscape. The regulator said it has been encouraging infrastructure sharing under “fairly good faith basis.” The new draft regulations, which include infrastructure sharing rules, are yet to be approved but have received criticism from Safaricom.
During the release of full year results for the financial year ended March 2018, Safaricom had no kind words for the CA’s proposals to allow sharing of infrastructure arguing that it was akin to rewarding competitors that did not invest in the same.
Currently, the industry is trying out mobile money interoperability that commenced in April and which might hand Airtel a lifeline. Its impact, the CA said, will be captured in the next report covering April to June.
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