Early this year Safaricom discontinued its unlimited package on Mobile Broadband for its clients. At the time most us of tried to convince Safaricom to continue with the unlimited package offer as we knew how popular it had become but Safaricom stood its ground.
Now the just released half year financial results has confirmed that it was a big blunder. Safaricom Average revenue per user reduced from Ksh.110 last financial year to Ksh 92 this financial year. It is telling that every product or service by Safaricom registered a positive growth in ARPU except Mobile Broadband. Voice ARPU increased from Ksh.288 to Ksh.320, SMS ARPU increased from 35 to 39, Mpesa ARPU increased from Ksh.92 to Ksh.115. See the chart below
Oooooh. Safaricom has an explanation for that which I think is not making sense. Seriously, what do they mean by “New Data Users Enter at lower ARPUs”. I don’t think new user is an automatic light user..it is a mix bag and that is why I think is not the reason.
At the time Safaricom CEO Mr. Bob Collymore claimed that they were seeing abuse of unlimited internet data package by a few individuals. To be exact he said they were seeing a situation whereby 1% of the unlimited internet data package users using 70% of the resources. My point then and my point now is that unlimited internet data package users are heavy users and are ready to spent to remain online at a reasonable cost. I guess when Safaricom stopped the unlimited package they moved to the other networks. Yes Safaricom is still reporting increase in the revenue from the data but I guess they would have made strong showing on the data side of things if they had left the unlimited package intact.
When it comes to data usage in Kenya the last mile connectivity is still an issue and it is the reason why broadband network is a clear possibility for many people. But the pricing model from safaricom especially discourage many heavy users. Of course it is great for many small time users, who are just there to check emails may be once per day.
As it stand now the country has a total capacity of 8.56 TB/s capacity of which only 6 percent is being used according to the last statistics by CCK. That is why I think the initiative by Zuku in partnership with Google called Wazi WiFi has a great potential. You can connect to Wazi WiFi which is now available in many parts of the town especailly in the restaurants, Malls and other places. Zuku charges 50 per day for unlimited connection on the WiFI
I would not say Safaricom are paying the price for that – those are stellar results they have across the board.
If Orange benefitted from the unlimited customers (like myself) crossing over, they have now had to raise their bundle costs and we will see how long dongle subscribers can be sustained.
But the final frontier is residential/home internet users, and Zuku or someone else need to wirelessly reach that group that is now served by Orange and Safaricom.
I am not saying there is a problem with Safaricom profits, but it is
noticeable that it is only on Mobile Broadband that there was reduction
in ARPU . Now the explanation they are giving on that is a bit shaky in
my view.
From the beginning I thought that stopping unlimited could affect them a bit . Especially the level of usage and spending on the data through mobile broadband. I knew I a number of people who moved to Orange and I can see you are confirming being one of them. That aside, I think the crowd using unlimited can be considered heavy users and I think overall they spent more on data.