Status of Mobile Telephony in Kenya for 2008/2009

The Communications Commission of Kenya (CCK) has a very interesting report for the second quarter of 2008/2009.

It is during this period that Telkom Kenya (read Orange) and Econet Wireless (read Yu) started rolling out their services in September and November 2008 respectively, bringing to four the number of licensed mobile operators in Kenya. This has led to expectations that the completion will lead to reduced costs, which it has and this is a story for another day.

There was increased mobile phone subscription of 11.9% between October and December 2008, and this is attributed to the entrance of the two mobile operators.

Indicator	Dec-07	Dec-08	Change (%)
Number of mobile subscribers	11,349,412	16,233,833	43.04
Mobile Penetration (%)	28.97	43.64	50.64

 

Source: CCK database

 

Again, the increase in mobile penetration was attributed to the increase in the number of mobile operators, increased mobile coverage and availability of low denomination calling cards, as low as Ksh. 20 (USD 0.25) introduced by both Safaricom and Zain.

In terms of mobile traffic there are quite a number of facts interesting to look at:

Indicator	Jul-Sep 07	Sep-Dec 08	Change (%)
Mobile to fixed traffic (Minutes)	5,799,400	9,778,341	68.6
Local mobile traffic	680,792,168	2,606, 590,177	282.88
Local SMSes sent	670,192,766	361,862,632	-46.01
Approximate number of data users (GPRS/EDGE, HSPDA, EVDO)	388,199	392,964	1.23

 

What is interesting to note was the effect Safaricom had on the statistics simply by offering free call promotion during September to December 2008 period. This saw an increase of 68.6% in mobile to fixed traffic and similarly a 282.88%in local mobile traffic, hence the reduction in the number of local smses sent. The interesting point to note is that the mobile telephony sector has spawned mobile Internet users to stand at 392,964 as at December 2008. It would be again be interesting to see how the numbers change towards the end of 2009, with Orange and Zain having promotions of the Internet modems from zero cost to Ksh. 5,000 (USD 62.50) on prepaid basis, with per minutes rates at USD 0.0125 to USD 0.0375 per KB downloaded.

Source: CCK database

The report can be downloaded from the CCK using this link.

Safaricom’s Okoa Jahazi

Safaricom is 12 years old and the largest mobile company in terms of subscriber base that stands at 12 million (or 32 % of Kenya's population) and has just launched a service product that is surely spinning heads among its competitors.

The service Okoa Jahazi (English translation might mean Save my Day) that offers Ksh 50 (USD 0.625) airtime credit to its prepaid customers in situations when they cannot afford or access airtime. The credit is repayable within 72 hours on next purchase of airtime and is available to customers who have demonstrated use of their SIM for at least a year. But what makes it unique is the top up charge of Ksh 5 (USD 0.0625) which is 10% above what is "borrowed". With that sort of "interest" charged and looking at it 12 million subscriber base, it is being estimated that Safaricom will be making an additional profit of Ksh. 1.83 billion (USD 23 million) at the minimum in a year alone from this offer.

Let us wait and see how the balance sheet looks like at this time next year.

Source: http://www.eastandard.net/InsidePage.php?id=1144010907&catid=457&a=1

 

Mobile telephony in Kenya

Growth of the ICT and telecommunication sectors in the emerging and developing economies has been cited as a major factor in the economic development of African countries. In Kenya ICT has been singled out as one of the cornerstones of Vision 2003 and the perceived benefits of telecommunication has led to the belief that mobile telephony has positive and quantifiable economic benefits in terms of GDP growth, poverty reduction and bridging of the digital divide. However the real benefits of the mobile phone to the poor in the society is still a debatable argument in the ICT industry.

In the last 10 years the sector has seen an unprecedented growth in mobile phone ownership and usage. The once priced gadget (used to cost initially USD 3,000 and now costs an average of USD 250) that was a preserve of the politicians and business men is now accessible and owned by the majority of Kenyans. The Kenyan telecommunication sector was liberalized in 1998, which before then the state monopoly was through Telkom Kenya (now Orange).With the liberalization saw the entry of Safaricom (then a subsidiary of Telkom) and Celtel (now Zain ) in 1999 and recently Yu (2008).

The licensees were to initially roll out services in major towns and roads (under their license conditions); and the sector has witnessed growth both in terms of operators, geographical coverage and subscriber base. Currently there are four mobile operators i.e. Zain, Safaricom, Telkom and Yu. The subscriber base has also increased from fewer than 6,000 subscribers in 2000 to over 12 million Kenyans in December 2008 with 77% of the Kenyan population covered. This growth has not been without drivers, among them competition, availability of cheap phones, low tariffs and regulatory intervention at times.

Kenya had an economic growth rate of 6.1% in 2006 and the transport and communication sector was credited with being one of the key drivers of the growth. These statistics give credence to the general consensus that the mobile phone sector adds economic value but the question is what value can be attributed to improvement of domestic income among the poor if any. Kenya currently has an estimated population of 38 million people and it is estimated half of population (17million) lives below the poverty line. Some 70% of the income poverty is used on food related needs and there is need to establish percentage that is used to power the mobile phone companies profits given most of the subscribers are prepaid.

Delloite and GSMA released a study at the end of 2008 and found that mobile telephony accounted for 5.1% of the GDP (Ksh 182,832 million) in the same year. Kenya currently is experiencing unprecedented famine and lack of food, this leads to the question of whether the populace are foregoing some essential expenditure in order to own a mobile phone. Although some people use mobile phones for "beeping", it is surprising that over 50 per cent of Kenyans live on less than a dollar per day yet many are able to purchase and use mobile phones.