The increased preference for messaging platforms like WhatsApp, Telegram, and Facebook Messenger is fast pushing the once-popular SMS into obsolescence as consumers turn to the
cheap yet more user-friendly and convenient options.Latest industry data shows that the number of SMSes sent and received declined to 12.7 billion in the year to June this year, a sharp drop of 36.4 percent from a similar period in 2020.
The data from the Communications Authority (CA) shows that SMS numbers have been declining quarter-on-quarter since June last year.
From a high of 20.09 million in June last year, the number of SMSes sent and received in the country declined to 16.98 million three months later and 14.18 million in December.
The shift to the new platforms has been both a burden and blessing to telecommunication firms. While they feel the heat from their underperforming text revenue streams, the platforms are helping drive the use of their mobile and fibre internet services.
“Voice and messaging still have a lot of opportunity to be explored despite stiff competition from both direct competitors and cannibalisation from IP (Internet Protocol) messaging platforms such as WhatsApp,” Safaricom says in its annual report for the year ended March.
Revenue basket
Texts contributions to telcos as a share of the total revenues has been falling for the past three years while mobile and fixed data contribution has been on the rise.
CA data shows that SMS contributed 18 percent of total mobile service revenues in 2018 that stood at Sh264.4 billion, behind data (fixed and mobile) at 20 percent and voice that accounted for 39 percent.
In 2019, SMS’ contributions to the telcos’ revenue basket dropped to 7.1 percent while the share of mobile and fixed data rose to 21.9 percent. Telecommunication firms made Sh276.6 billion from mobile services.
Last year, the share of SMS contributions fell further to 5.8 percent while that from mobile and fixed data rose to 24.7 percent. Revenue from voice accounted for 35.8 percent. Telcos made Sh280.1 billion in the period.
Besides the convenience and user-friendliness, the shift to online messaging apps is fueled by affordable data packages for mobile and fibre-based internet, and cheap deals for smartphones.
“Smartphone uptake continues to increase, driven by the decline in prices, and enabling more people to gain mobile internet,” Safaricom says in its March report.
Low-end 4G-enabled smartphones on average are priced between Sh5,000 and Sh6,000, making it easy for most Kenyans to acquire the handsets.
And with the appetite and revenues from text streams falling over the years, telcos have ramped up investments in fixed data connections, diversifying revenue streams to tap into the shift.
Telcos have ramped up investments in the fixed data market with connections growing 18 percent to 734,329 as at June from 619,579 a year ago.
Safaricom tops in the fixed data connections for homes, businesses and offices at 269,397 connections or 36.7 percent of the market followed by the Wananchi-owned Zuku with 217,300 connections or 29.6 percent while Telkom Kenya had 4,361 connections or 0.6 percent in the year ended June.
Telcos have previously turned to SMS promotion where subscribers stood a chance of winning smartphones and airtime as a way of wooing more subscribers to the texting world.
SMSes were once cheaper and more convenient to reach out to people in remote areas, but subscribers can chat and call using free WhatsApp, increasing the platform’s appeal.
The rise in fixed data connections and mobile data subscriptions by 5.16 million in 46 million in the year to June further highlights the surge in popularity for online-based platforms like WhatsApp.
Mobile data subscriptions have also been on the rise.
In June, mobile data subscriptions stood at 46,002,220, from 40,832,642 a year ago, with Safaricom holding 68 percent of this market share followed by Airtel 26.6 at percent and Telkom Kenya (4.6 percent).
Safaricom, which in March launched the 5G technology with 15 sites in Nairobi, Kisumu, Kisii and Kakamega, says it wants to increase the number of cities and towns covered by its high-speed internet to 200 by the end of December and commercialise the super-fast services in the next year.
Safaricom is aiming to increase its data business to offset sluggish growth in voice, where small revenue growth due to saturation has forced the firm to turn to M-Pesa and the internet to power future growth.
Airtel Kenya— Safaricom’s closest rival in the local market recently upgraded 600 network sites to meet fifth-generation (5G) mobile internet services capabilities in readiness for the roll-out of the super-fast services in urban centres.
The telco is betting on the network upgrades to shore up its data business and offset sluggish growth in mobile calls, where they are seeing a small revenue growth due to saturation.
jmutua@ke.nationmedia.com
No comments :
Post a Comment