Safaricom results confirm Kenya’s budding and money-spinning data market

Safaricom’s financial result for the year-ended march 2012 released Thursday show that despite a drop in the revenue from voice calls, a big chunk of the telephone network operator’s revenue, attributed to the growth in demand for data, cushioned the company from suffering losses.

According the results, the top Kenyan network operator’s earnings from mobile and fixed data revenue increased by 23 percent to reach Ksh6.57 billion, indicating Kenya’s fast growing and lucrative data market.

Compared to 2009’s Ksh.1.51 billion data revenue, the network operator’s current report indicate a three-fold growth. In 2011, the data revenue was KSh5.37 billion indicating a 23 percent growth. The growth in revenue from data, Safaricom says, is attributed to increased data used by its steadily growing customer base, says Safaricom.

The year saw Mobile and fixed Data Customers increase from 3.48 million to 4.55 million representing a 30.7 percent increase. Compared to 2009, the number of data customers increased from 1.47 million.

Safaricom says, with the increased price wars among the country’s major network operators that threatened its revenue from the voice calls, it had to embark on an aggressive strategy set to develop alternative source of revenue.

According to Safaricom, it carried out an aggressive campaign to popularize its data business, which saw it launch the unlimited data bundles. The company now boasts of robust 3G network. However, with the entry of Airtel, its major competitor, which has upgraded its network to 3.75, the competition is expected to increase.

The drop in profits from voice calls, which accounts for 67 percent of its revenue dropped by 1.7 percent. Safaricom attributed the plunge to the move by Communication Commission of Kenya (CCK), Kenya’s telecommunications-industry regulator, August last year to halve the rates charged by operators to connect voice calls across networks.

While releasing the results Thursday, Safaricom CEO Bob Colymore said alternative to the unlimited data bundle would soon be unveiled.

Safaricom said it spent about KSh24 billion on network modernizations to Internet Protocol (IP) and strengthening its network quality and capacity. This also shows the emerging importance of the data business to the network operators. The company increased its sites by 8 percent, to 2690 as of March, with 54 percent of the base stations 3G enabled.

According to CCK report, 44.12 percent of the populations have access to the Internet with the majority accessing the Web through mobile phones. With Safaricom reporting a customer-base of 19.1 million and only 4.55 million mobile and fixed data users, it shows untapped market with a huge opportunity for the data market

CCK commented the steady growth in mobile subscriptions and the growth in Internet use is likely to continue as operators seek to leverage the new and emerging technologies expected to offer attractive packages aimed at garnering more subscribers.

Just like the voice call price wars, Kenya’s major operators have drawn the battle line to garner more data customers; Safaricom has launched 42Mbps 3G speeds in selected sites around Nairobi. The launch came hardly two months after Airtel started an upgrade of its network.

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