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Safaricom defends subscription market share; Airtel loses steam – latest stats

  • CA statistics show SAFCOM's subscriber growth is improving, while Airtel's is slowing

  • SAFCOM has room for stronger growth in mobile payments/transfers and data given social distancing measures

  • Risks to SAFCOM: Spread of coronavirus hampering liquidity and an Airtel-Telkom merger

Tracy Kivunyu
Tracy Kivunyu

Equity Research Analyst, Telecoms

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Tellimer Research
1 April 2020
Published byTellimer Research

The Communications Authority of Kenya (CA) has released its quarterly statistics for the three months to December 2019. The statistics correspond to Safaricom's Q3 20 financial year.

SAFCOM defended its market share despite competition from Airtel, which seems to be losing momentum. We note a slowdown in the growth of peer-to-peer (P2P) transfers by value, but believe that subsequent quarters will show a recovery in mobile money (transfers and payments made via phones) and data usage, as customers adjust their lifestyles to the social distancing measures introduced to limit the spread of coronavirus. We reiterate our Buy recommendation.

Mobile subscriptions grew by 10% yoy (2.5% qoq) to 54.5mn in the period to end-2019. Although Airtel continued to dominate growth in subscriptions, we observe that its rate of growth slowed yoy, while Safaricom's accelerated in the same period. This indicates that competitive pressure on SAFCOM may be easing.

Table 1: Subscription growth

Dec-19 qoq growthDec-19 yoy growthDec-18 yoy growthDec-17 yoy growth
Safaricom2%13%6%7%
Airtel8%22%57%8%
Telkom-5%-24%15%33%
Source: CA Satistics

Consequently, Safaricom's market share was relatively resilient over 2019, closing at 65%.

Table 2: Market share of subscribers

Dec-17Mar-18Jun-18Sep-18Dec-18Mar-19Jun-19Sep-19Dec-19
Safaricom69%67%65%64%63%62%63%65%65%
Airtel17%20%21%22%23%26%25%25%26%
Telkom9%9%9%9%9%8%8%7%6%
Source: CA Statistics

Despite Airtel gaining 8% in subscriptions qoq, voice traffic market share dipped 11ppts to 29%. This is because the telco revised its on-net voice traffic statistics to exclude incoming traffic (given that, ideally, only outgoing traffic is billed). Consequently, Safaricom's share of voice traffic improved to 67%.

Table 3: Voice traffic market share statistics

Dec-17Mar-18Jun-18Sep-18Dec-18Mar-19Jun-19Sep-19Dec-19
Safaricom73%67%66%62%64%60%57%56%67%
Airtel22%29%30%33%31%36%39%40%29%
Telkom5%5%4%4%5%4%4%3%3%
Source: CA statistics

Mobile money statistics have been restructured, making it difficult to compare historical performance, but we note a dramatic slowdown, of 91%, in Airtel's subscriptions (we will seek clarification of this data). We note that, for P2P transfers, Safaricom's transacted value slowed yoy, but we believe that the recent measures to cut transaction charges and increase transaction limits should lead to a recovery.

Table 4: P2P transaction value growth

Dec-19 qoq growthDec-19 yoy growthDec-18 yoy growthDec-17 yoy growth
Safaricom3%13%23%16%
Airtel-70%-63%15%-61%
Source: CA statistics

Zuku gained 2ppts to lead in the fixed data segment, with Safaricom closely trailing at 33%. We expect the two companies to benefit from increased fixed data usage in the coming quarters due to the impact of social distancing measures. 

Table 5: Fixed data market share

Dec-18Mar-19Jun-19Sep-19Dec-19
Wananchi Kenya (Zuku)38%36%35%33%35%
Safaricom30%32%33%34%33%
Jamii Telecommunications Ltd14%14%15%15%16%
Source: CA statistics