Airtel and Telkom Kenya will need to consolidate recent positive results in different market frontiers if they are to quickly grow their market share should their merger go through, suggests a Nation Newsplex analysis of recent mobile use trends.

A year-on-year comparison from the July-September quarter of 2017 and 2018 shows that the two telcos registered significant gains on certain key areas of competition against the industry leader, Safaricom, according to data from the Communications Authority of Kenya (CA).

Safaricom lost ground to the competition in overall subscription, voice traffic, text messaging and Internet data.

M-Pesa’s wide network of agents, which has enabled customers to readily deposit or withdraw money, remains the biggest challenge to any operator attempting to grow its stakes in the mobile money market.

During the period under review, Safaricom ceded eight percent of the market subscription share to competitors − dropping from 72 percent to 64 percent. Airtel led the onslaught with a subscription growth of 71 percent, followed by Telkom Kenya (22 percent) and Equitel (four percent).

The growth by the two soon-to-be partners is particularly a big gain because having very low numbers of subscribers on their networks has been a major hindrance in their individual bids to increase their market share.

Talk time

The increase in subscriptions coupled with intense marketing campaigns saw a growth in the number of subscribers using services in the two networks, at the expense of Safaricom. Airtel recorded a 148 percent spike in outgoing call time, from 1.9 billion to 4.8 billion minutes, the highest rise. This was a third of the 14.4 billion minutes quarter total. Telkom Kenya was second, recording a five percent increase to 619 million or four percent of the total call minutes. Safaricom also had a five percent increase in call time with 8.9 billion minutes, thus still dominating the voice services frontier (62 percent).

In the event of a merger, the combined Airtel and Telkom share of outgoing call minutes (37 percent) will be a good place to start from if the steep subscription and call time growth curves can be translated into a larger share of market revenue.

CA attributed the drop in Safaricom’s voice traffic to the end of the Safaricom Tunukiwa Promotion, in which customers bought voice or sms bundles at cheaper rates and stood a chance of winning a prize.

The proportion of the time spent by Safaricom subscribers who made calls to people on the same network shrunk by 16 percentage points to 67 percent by September 2018 from 83 percent, the market share it had held since 2014. Airtel’s share increased by more than a fifth, from eight percent to 30 percent in the same period. Telkom stagnated at three percent.

Airtel commanded more than a half (58 percent) of the off-net outgoing call time (calls to other networks), a four percent increase from the same period the previous year. Safaricom came in second with 26 percent, while Telkom Kenya was third (13 percent) and Equitel (two percent). Generally, the total number of outgoing call time during the three-month period under analysis stood at 14.38 billion minutes, a rise by a third from the previous year.

Even as Safaricom’s call minutes went down, voice revenue still remained the largest source of service revenue, accounting for 42 percent, according to the company’s unaudited half year results for the period ended September 30, 2018. It is followed by M-Pesa (31 percent), mobile data (17 percent) and sms revenue (eight percent).

Despite accounting for the least share of total service revenue (three percent), fixed data services was the area with the fastest growth rate in proportion of the market leader’s income. Fixed revenue increased by a fifth to Sh3.91 billion in 2018. M-Pesa was second, with an 18 percent increase, followed by mobile data (11 percent).

Sms traffic

Another frontier that saw the other players outperform the industry leader in rate of improvement was on Short Message Services (SMS).

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