Flash Report - Equity / Kenya

Kenya: Covid measures boost mobile data, SMS and digital payments

  • Subscriptions, data and SMS consumption registered positive performance over the initial Covid lockdown period
  • Digital payment transaction value grew but average transaction value declined. Voice traffic was also weak for Safaricom
  • We expect more data and SMS growth but at a slower rate, and digital payments to increase but with lower revenues
Kenya: Covid measures boost mobile data, SMS and digital payments

The Communications Authority of Kenya has released its latest quarterly statistics.

  • Mobile subscriptions performed strongly in the three months to end-June, but voice traffic slowed and average person-to-person (P2P) transaction value declined. However, the Covid response measures in the period resulted in higher data and SMS consumption. We expect mobile data and SMS to continue growing in July-September, albeit at a slower rate.

  • Digital payment transaction values should continue to grow, but this will be offset by the revenue impact of the extension of the ban on fees on small transactions.

  • Mobile subscriptions grew 3% qoq to 57mn – the highest quarterly growth registered since March 2019. Airtel was flat, but Safaricom recovered from 1% in the previous quarter to 4% while Telkom reversed its 6% decline to an 8% growth in the three months to June. Subscription market share remained defensive, with Safaricom ceding only 30bps of market share to 64.2%.

Total voice traffic declined by 0.9% in the quarter, owing to a 9% decline in Safaricom's traffic and a 21% drop in Equitel traffic. This was offset by 7% and 16% increases in Telkom and Airtel traffic, respectively. Airtel's strategy of cheap offers –such as Tubonge 10 that offers 100 minutes for on-net calls at US$0.09 daily – had some success as increased as Kenya implemented its initial lockdown measures in March. Consequently, Safaricom lost 6ppts of market share. However, SMS traffic grew by 20%, with Safaricom maintaining its 95% market share.

As expected, digital payments and transfers traffic benefitted from the ban on charges for transactions below KES1,000 and free bank-to-wallet transfers. Also, Covid policy measures encouraging electronic transactions led to higher usage in customer-to-business (C2B) and business-to-customer (B2C) transactions. However, we note that the average P2P transaction value declined 14% qoq, illustrating that most transactions were largely in the fee-free band.

The Covid response measures were also positive for mobile data traffic, which grew 20% in the period. Safaricom managed to defend its market share in mobile data at 69% and showed a slight improvement in fixed data. Fixed data subscriptions registered the strongest growth in fibre connections, which increased by 22% in the quarter.

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