In brief
The Communications Commission of Kenya (CCK) recent quarterly report for 2010/2011 confirms what we have known so far, that the recent price wars between Safaricom and Airtel have led to increased mobile line subscribers and reduced revenues for the telcos. Click here to access the report.
Overall teledensity rose to 56.9 per cent from 53.3 per cent in June 2010, with mobile services accounting for 55.9 per cent.
Mobile traffic and usage patterns
A total of 6.63 billion minutes of local calls were made on the mobile networks against 6.05 billion in the previous quarter, representing 9.6 per cent increase. Similarly, the number of voice minutes received on all mobile networks was 6.63 billion minutes, representing 97.5 per cent increase from the same period of the previous year. The number of SMS recorded during the quarter was 740 million text messages compared to 769.6 million text messages sent the previous quarter. This is attributed to the recent price wars between Safaricom and Airtel Networks, and which have featured recently in the Kenyan parliament where the government was concerned at the projected drop in tax revenues from the telcos amounting to KES. 5 billion (USD $ 62,500,000).
Internet traffic and usage patterns
The total number of internet subscriptions registered 4.3 per cent growth from 3.09 million in the previous quarter, Jun 2010, to 3.2 million in the quarter under review. The number of internet users was estimated at 8.69 million from 7.8 million users in the previous quarter. Broadband subscriptions increased from 18,626 subscribers in the previous quarter to 84,726 representing 0.97 per cent of the total internet subscriptions in the country, and is the primary driver towards the internet subscriptions.
Mobile operators continue to dominate the internet market with more than 98 per cent of the Internet market share being through mobile services
The international internet connectivity bandwidth recorded marginal decline from 20,384.12Mbps in the previous quarter to 20,209.56Mbps during the quarter under review. This was as a result of decline in VSAT connectivity.
Mobile tariffs
Mobile tariffs reduced significantly over the quarter registering an average of KES 2.65 (USD $ 0.033) for on-net calls per minute from KES 4.78 (USD $ 0.059) per minute in the previous period and KES 2.5 (USD $ 0.03) for post-paid subscribers at the end of the quarter under review.
This represents 33.4 per cent reduction on pre-paid tariffs and 55.5 per cent on post-paid tariffs from the previous period.
The tariff decline is attributed to an interconnection determination by the Commission during the period that saw mobile termination rates reduced to KES 2.21 (USD $ 0.028) from KES 4.42 (USD $ 0.055).
Mobile and fixed line subscriptions
The quarter under review recorded 9.5 per cent mobile subscriptions growth from 20.1 million in the last quarter to 22 million subscribers. This is the highest growth that has been recorded over the last three quarters and the significant growth could be attributed to the availability of bundled package that promotes cheaper handsets preloaded with airtime and SIM cards coupled with the reduction of tariffs.
On the other hand, the fixed lines declined by 2.7 per cent from 234,522 to 228,391 lines. Similarly the fixed wireless recorded a 37.2 per cent decline from 225,592 in the previous period to 141,580 during the period under review. This will still keep declining bearing in mind that the telcos offering these telephony mode are unable to provide acceptable customer support services and are plagued with rampant fibre optic cable vandalism and theft, rumoured to be self-inflicted in the highly competitive sector. The total number of main fixed lines (fixed lines plus fixed wireless) stood at 369,971 representing a penetration of 0.96 main lines per 100 inhabitants. This is against 1.7 and 17.1 main lines per 100 inhabitants in Africa and the world respectively (ITU world telecommunication/ICT indicators database, 2010) and is a trend unlikely to be reversed.
This is confirmed by the fact that during the quarter, Airtel Networks and Telkom Orange gained 4.4 and 1.3 percentage points respectively of market share while Safaricom and Essar Telecom dropped by 4.8 and 0.7 percentage points respectively. In terms of absolute net additions Airtel Networks registered the highest number during the quarter under review with 1,143,353 new subscriptions followed by Safaricom with 473,979. Essar Telecom lost 26,266 subscriptions.
The prepaid option continued to dominate the mobile market accounting for 99 per cent of the total mobile subscriptions against 1% of post paid lines.
Conclusion
The telcos continued to demonstrate strong and consistent growth as demonstrated by increased subscriptions in the mobile market while the fixed line continue on a declining trend.
The number of mobile subscriptions has tripled in the last five years from 7.3 in 2006 to the current 22 million subscriptions. With competitive pressure likely to remain intense among the four service providers, growth in subscriptions is expected to continue. The mobile/data subscriptions have continued to experience significant growth, driven by consumer demand as well as the need by operators to diversify services as a result of intense competition in the voice market.
Growth in internet subscription resulted in increased internet usage from 19.9 per cent in the previous quarter to 22.1 per cent.
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