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Airtel Kenya Still Lacks an Economic Moat, but latest industry data should worry Safaricom Plc

In 2023, mobile services generated KES 384.3 billion in revenue, marking a 13.2 percent increase from 2022. On the same trend, investment in the mobile sub-sector grew by 20.6 percent, to record KES 70.9 billion in 2023.

By Steve UMIDHA

The number of subscribers on Airtel’s network continues to grow as Safaricom loses, according to the latest statistics by the Communications Authority of Kenya (CA).

The fourth quarter sector statistics report for the financial year 2023/2024 between April and June 2024 shows that Airtel Networks gained considerable market share in both mobile (SIM) and Broadband subscriptions. The operator’s overall market share during the review period jumped to 6.6 percent from 5.1 percent.

On the other hand, Safaricom Plc lost on both segments including its flagship mobile money platform, MPESA, whose market share dropped from 94.9 percent to 93.4 percent during the period under review.

Safaricom began to lose market share after opposition leader Raila Odinga called for consumers to boycott the network, accusing it of playing a role in an August 2017 presidential vote whose outcome he successfully challenged in court.

It was a move that has continued to hurt Safaricom’s earnings on those two fronts with its wobbly internet services often called to question.

Industry growth

Meanwhile, the telecommunications sub-sector in the country experienced significant growth during the period attributed to expansion of telecom infrastructure and increased adoption of smartphone services.

However, there was a decline in uptake of mobile SIM cards in the period ending 31st December 2023 attributed to high churn vis-à-vis acquisitions especially across Telkom Kenya Limited network.

Notably, the uptake started picking during the subsequent quarters resulting to 68.9 million active1 mobile (SIM) subscriptions translating to a penetration rate of 133.7 percent by end of June 2024

Mobile Money

By end of June 2024, mobile money subscriptions stood at 39.8 million translating to a penetration rate of 77.3 percent. This increase is directly proportional to the increase in mobile (SIM) subscriptions.

However, the removal of withdrawal codes for transactions sent from M-pesa to Airtel Money enabling funds to be transferred directly into the Airtel Money account (wallet) could have enhanced the uptake for mobile money services.

Cheap Internet 

Further, billionaire Elon Musk’s Starlink looks set to further disrupt Africa’s internet market with a router-free offering.

Cutting out the need for expensive hardware would help Starlink undercut traditional monopolies like Safaricom and MTN and expand its market share in a region where high costs have long been a barrier to wider internet access.

Martin Macharia, a Kenyan tech analyst, sees this development as a pivotal moment for Africa’s internet landscape.

“Starlink’s router-free option could be a game-changer in Africa. It removes one of the biggest cost barriers and could lead to widespread adoption of satellite internet. This will for sure upset incumbent providers,” Macharia said.

“It is not just about cheaper internet—it’s about breaking the stranglehold that local providers have on the market which is good because general offering improves.”

Innovation Village reported that the satellite provider’s strategy will enable mobile phones to connect directly to satellites, bypassing needless expenditure on hardware.

Starling submitted a filing outlining its plans to the US Federal Communications Commission (FCC) in May of this year.

Such a service removes one of the last remaining barriers to the widespread adoption of satellite internet in Africa, where high upfront hardware costs have kept many potential users on the sidelines.

The move comes as Safaricom, the leading telecommunications provider in Kenya, pushes for tighter regulations on Starlink, wary of the potential threat to its lucrative data bundle business.

Safaricom has enjoyed near-monopoly status in Kenya, leveraging its extensive infrastructure and customer base to maintain a stronghold on the market.

The Vodacom-owned East African giant in June 2023 announced its intention to use AST SpaceMobile’s satellite internet offering to improve its broadband services. Vodacom’s majority owner, Vodafone and AST SpaceMobile have trialed space-based voice and data, announ ing success with space-based 5G voice calling and data and download speeds of nearly 14 Mbps by September 2023.

Additional reporting by Seth ONYANGO.

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