Safaricom Subscriber Base Up - Market Share Down

Kenya's Safaricom has reported that its subscriber base has risen by 11.2 percent during the second half of 2008, although it lost market share to new entrants into the market. Safaricom said it had 13.3 million subscribers and its market share has fallen to 77 percent from 81 percent at the end of September, when it had 12 million customer.

The firm also announced plans to seek between KES 5 - KES 12 billion to fund network expansion and roll out new products.

"A corporate bond seems to be very attractive at the moment, given the current tight liquidity in the market," said the firm's chief finance officer, Mr Chris Tiffin on Thursday.

The Kenyan government floated a portion of its shareholding in the firm last year in one of the largest sales seen in that part of the world. Following the floatation - the Kenyan government owns 35% of Safaricom, 25% is floated on the stock exchange and 40% is held by Vodafone Kenya Ltd - which in turn is 87.5% owned by Vodafone Group and 12.5% owned by a mystery company, Mobitelea.

In a presentation, Safaricom said that VAT (16%), Excise levy (10%), annual CCK operating fees and the soon to be introduced Universal Service Fund Levy (0.5% - 1%) continue to make the Kenyan telecommunications market one of the most heavily taxed markets.

A recent report from Pyramid Research predicted that mobile penetration in Kenya's telecom market will grow by 95 percent over the next five years, a market growth that will reflect intense competition among network operators and lead to a rapid uptake of mobile data services.

"By the end of 2008, Kenya had more than 15.0 million mobile subscribers, with a mobile penetration rate of 39 percent. The subscriber base is expected to rise to 29.28 million, or 66.7 percent penetration, by year-end 2013." said Dearbhla McHenry, analyst at Pyramid Research.

Posted to the site on 19th March 2009