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Smartphones, betting step up data market war

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Fibre optic cables ready for laying. Kenyan telcos are changing tack to win the Internet war. FILE PHOTO | NMG
Fibre optic cables ready for laying. Kenyan telcos are changing tack to win the Internet war. FILE PHOTO | NMG 

When Safaricom #ticker:SCOM announced half year results for the six months to September 2009, its income from voice appeared to hit a peak, calling for a shift in business approach.

“We intend to increase our market share in data services provision to compensate for voice call market share fall,” said Michael Joseph, the company’s then chief executive.

SMS, M-Pesa and data represented a meagre 12.9 per cent of the company’s revenues, while voice represented 83.4 per cent. But unbeknown to many, data would move to become one of the biggest revenue earners for the company, as the voice market became saturated.

The data market, which at the time had a 10 per cent penetration, was dominated by cable providers such as Access Kenya, Internet Solutions, Jamii Telecom (which own the now-popular Faiba network) and the Wananchi Group (owners of the Zuku network).

But Safaricom, which had by then amassed enough resources to allow for risky divesting, appeared less intimated by the dominators, and moved in hard to chase the data market. Safaricom embarked on massive infrastructure development that saw it play a pioneering role in the launch of both 3G and 4G data services.

As a result, by the half year ending September 2016 , data users on Safaricom’s network had grown by 38.5 per cent to 7.4 million.

The company is now looking to gain more advantage from fixed data users, through its recently launched home fibre service.

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Today, all companies in the telecommunications sector have awakened to the revelation that whoever rules the data market will be the most profitable, and are all re-aligning their business strategies to fit this reality.

“We understand that new needs are evolving, consumers are evolving, cities are expanding, businesses are expanding, and the demands for Internet are also increasing,” said Airtel Kenya then CEO Adil El Youssefi, at a breakfast meeting in 2015.

This change-point was a consequence of the massive uptake of smartphones — more than 60 per cent of Kenyans now have smartphones, according to a report by Jumia Business Intelligence and GSMA Mobile titled White Paper 2017: Trends from the Kenyan Smartphone and E-Commerce Industry.

Initially, a majority of the smartphones in the country were used to access social media networks, but recently, the nationwide interest in online sports betting has contributed to more gadget purchases, and ultimately more data users.

In 2016, more than 2.5 million Kenyans accessed Facebook daily, each spending an average of 6.5 hours per month on the platform. Government institutions, banks and other businesses are also now taking most of their services online, further encouraging the use of data services.

In a country where 99 per cent of data is accessed using smartphones, such high numbers of daily users, are enticing to the existing telcos — Telkom, Safaricom, Airtel, Equitel, and most recently, Faiba — all of which are exploiting both known and foreign strategies to gain marketshare, in what is now emerging as some commoditising of data pricing.

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For price-reduction has been the leading approach in the quest for more data users, seeing Kenyan consumers benefit from the bid by service providers to keep their services affordable.

Airtel, for instance, early this week unveiled a post-paid tariff plan that would see users get 30 gigabytes of data, 1500 minutes of talk-time and 3000 smses for Sh2,999.

With the race getting tighter, industry investments are likely to encourage a shift in the data market, where Safaricom commands 77.1 per cent share, followed by Airtel Kenya, at 15.6 per cent, and Telkom at 6.2 per cent.

– African Laughter

Gurjit Singh is Microsoft Certified IT Professional. He likes to write about Computer Network, WordPress, Blogging Tips, SEO, Make Money Online, Computer Tips and Creating Tech Tutorials.
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