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Kenya

Safaricom gains subscriptions for first time since 2017; competition persists

    Tracy Kivunyu
    Tracy Kivunyu

    Equity Research Analyst, Telecoms

    Tellimer Research
    26 September 2019
    Published by

    The Communications Authority of Kenya (CA) released its statistics report for the quarter ending 30 June 2019 (Q4). While we note an improvement in mobile money and overall subscription market share for Safaricom, there is still sustained pressure from Airtel in voice and data traffic. We expect Safaricom to continue using promotions to maintain subscription growth qoq to compete with Airtel. However, Airtel is also expected to continue discount pricing to maintain traffic market share growth. We retain our Hold recommendation on Safaricom.

    According to the report, mobile penetration grew by 2% qoq to 109%, with a 2% qoq growth in subscriptions to 52mn (15% yoy). Safaricom grew its subscriptions by 4% qoq, while Airtel subscriptions declined by 4% in Q4. Safaricom gained 1% market share in the quarter to 63%, its first since September 2017. We attribute the growth to Safaricom's bonus promotion in the quarter dubbed "Kredo Dabo Dabo", which granted users a 100% bonus airtime.

    Table 1: Subscribers market share 

    Jun-18Sep-18Dec-18Mar-19Jun-19
    Safaricom65%64%63%62%63%
    Airtel21%22%23%26%25%
    Telkom9%9%9%8%8%
    Equitel4%4%4%3%4%
    Source: CA statistics


    Despite making gains in subscriber share, Safaricom still lost out to Airtel in voice traffic share, dropping by another 3ppts to 57% in Q4.

    Table 2: Voice traffic market share 

    Jun-18Sep-18Dec-18Mar-19Jun-19
    Safaricom66%62%64%60%57%
    Airtel30%33%31%36%39%
    Telkom4%4%5%4%4%
    Source: CA statistics


    In mobile money subscriptions, Safaricom maintained its dominance with a 3% qoq growth.

    Table 3: Mobile money subscriptions 

    Jun-18Sep-18Dec-18Mar-19Jun-19
    Safaricom 23,946,174 24,206,341 25,570,165 26,066,448 26,900,772
    Airtel 3,619,415 3,434,843 3,773,090 4,075,475 3,681,194
    Telkom 63,023 59,933 114,807 103,585 76,061
    Equitel 1,959,009 1,992,150 2,075,676 1,722,330 1,882,440
    Source: CA statistics


    M-Pesa transaction value grew 14% yoy (3% qoq) in the period, reversing the previous quarter's flat performance. Equitel's transaction value also rebounded in the period to grow 4% qoq. Meanwhile, Airtel and Telkom continue to significantly lag in the mobile money segment.

    Table 4: Mobile money transaction value (KESmn) 

    Jun-18Sep-18Dec-18Mar-19Jun-19
    Safaricom 1,503,293 1,585,729 1,649,730 1,665,078 1,711,221
    Airtel 1,270 1,153 907 929 844
    Telkom 118 197 365 351 302
    Equitel 413,423 439,189 467,223 453,743 469,859
    Source: CA statistics


    Safaricom's market share trajectory will help the telco become the leader in the fixed data business segment by the end of the year, beating integrated data and content provider, Zuku (Wananchi). In August, Safaricom announced a 50% discount on new connections, which should further help ramp up subscriptions.

    Table 5: Fixed data market share

    Jun-18Sep-18Dec-18Mar-19Jun-19
    Wananchi Kenya30.4%39.2%38.0%35.8%34.8%
    Safaricom21.2%27.6%29.6%31.5%32.7%
    Jamii Telecommunications Ltd11.8%13.1%13.8%14.0%14.6%
    Poa Internet Kenya7.0%7.6%7.5%7.4%7.8%
    Internet Solutions Kenya4.1%4.3%4.1%3.9%3.7%
    Mawingu Networks21.1%3.8%2.9%3.1%2.4%
    Liquid Telecommunications Kenya2.6%2.4%2.2%2.1%2.1%
    Telkom Kenya1.1%1.1%1.0%1.2%1.2%
    Mobile Telephone Networks Business Kenya0.2%0.2%0.2%0.2%0.1%
    Iway Africa Kenya0.2%0.2%0.1%0.1%0.1%
    Other Fixed Service Providers0.4%0.5%0.6%0.6%0.3%
    Source: CA statistics

    Although the CA did not publish mobile data market share for Q4, sustained competition from Airtel suggests that Safaricom will likely continue to face pressure in market share in the coming quarters. For instance, Safaricom launched a 200% bonus airtime promotion in August, with 200MB free prepaid Youtube access. Earlier in July, Airtel had launched an integrated monthly bundle offer at a steep discount to Safaricom's existing 'All-in-One' bundle offer (Table 6).


    Table 6: Monthly bundle promotions 

    KES 500KES 1,000KES 2,000
    SafaricomN/A200 mins + 4GB data or 400mins +1GB data1,000 mins + 6GB data or 600 mins +12GB data
    Airtel2.5GB data, 150 mins, 1,000 SMS8GB data, 400 mins, 2,000 SMS20GB data, 1,200 mins, 10,000 SMS
    Source: Company filings
    Table 7: Mobile data market share 

    Jun-18Sep-18Dec-18Mar-19
    Total subscriptions 40,702,826 41,854,706 45,333,942 46,461,719
    Safaricom70%70%70%65%
    Airtel23%22%22%27%
    Telkom7%8%7%7%
    Equitel1%1%1%0%
    Source: CA statistics