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Market Report – 2nd July 2021

- July 6, 2021 - 0 comments

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Feature of the week:

Safaricom Market Share Rises to 64.4% in 1Q2021

  • According to the Communication Authority of Kenya (CA) 1Q2021 industry statistics, Safaricom’s market share in customer subscriptions rose to 64.4% (quarter on quarter, q/q) in 1Q2021 (4Q2020: 63.6%) as mobile subscriptions grew by 2.1% q/q to 39.9 million subscribers (4Q2020: 39.1 million subscribers). On a year-on-year basis however, Safaricom’s market share fell slightly by 0.2% from 64.5% in 1Q2020.
  • Airtel Kenya’s mobile subscribers declined by 1.1% q/q to 16.5 million subscribers (4Q2020: 16.7 million subscribers) with market share easing to 26.6% as a result (4Q2020: 27.2%). Telkom’s mobile subscribers on the other hand grew by 0.6% to 3.8 million subscribers with market share remaining flat at 6.2%.
  • The company’s voice market share increased to 70.9% (4Q2020: 69.2%) as the company’s local voice traffic (national outgoing) edged up by 1.4% q/q to 13.8 billion minutes (4Q2020: 13.6 billion minutes).
  • According to the CA, local mobile voice traffic eased by 0.9% q/q to 19.5 billion minutes. This was likely due to a dip in voice traffic in other players (Airtel and Telkom)
  • Safaricom’s market share in the SMS segment rose slightly to 92.3% (4Q2020: 92.2%) despite SMS traffic falling by 25.4% to 9.8 billion texts (4Q2020: 13.1 billion texts), due to a higher decline in voice traffic for the other players.
  • Safaricom’s mobile data subscriptions declined by 0.7% to 29.3 million subscribers. However, its market in the segment rose to 68.2% (4Q2020: 67.6%), probably due to a higher decline in other players.
  • Fixed data registered subscriptions grew by 4.9% q/q to 255,594 users from 243,623 in 4Q2020. Consequently, its market share rose slightly to 35.8% (4Q2020: 35.6%). The company maintained its market leadership position in the segment (Wananchi Group was second with a market share of 30.3%).


Investors should keep in mind that the high and growing market shares in some of the legacy segments like voice and messaging do not necessarily translate to positive revenue growth. This is because of commodization of the segments – to grow usage in these segments, company has to cut prices (this is done either through permanent cuts and/or occasional promotional offers). This increases usage ((e.g. minutes of use per subscriber in case of voice) but reduces the revenue per unit (e.g. revenue per minute or yields in case of voice). In recent years, the decline in revenue per unit dominates the increase in usage, leading to decline in the average revenue per user (ARPU) and revenues.

This trend in voice and SMS is likely to continue. In the short term, the intensity is likely to be amplified given the higher inflation (also note that the higher excise taxes will likely contribute to this if passed on to consumers) – we expect customers to be more cost conscious and will likely be hunting for bargains on some of these services or will increase adoption of over the top applications such as WhatsApp). With the increase in excise duty, companies may also choose to absorb the taxes, which also hurts their revenues.

We remain optimistic on Safaricom’s growth prospects, driven mainly by data and M-PESA.

Equities Market Summary:

Nairobi Securities Exchange Performance

The All Share Index (NASI) and the NSE 20 Share Index rose by 1.1% and 1.5% to close the week at 173.49 and 1,928.42 respectively. Market turnover declined by 24.2% to KES 2.6 billion while the volume of shares traded fell by 20.3% to 89.3 million shares.

We attribute the gain on Jubilee to shareholder approval of amendments to the articles of association, giving the company the option to buy back its shares. We opine that the gain on BAT was driven by the lower tax on nicotine pouches. NBV announced plans to spend about KES 3.0 billion to acquire certain assets as part of its restructuring. These assets include a parcel of land on which it plans to build a cement plant, a heavy vehicle maintenance company (Delta Automobile) and two companies in the aviation industry (Air Direct and Aviation Management Solutions Limited).

We could see some profit taking activities on counters that have rallied in recent weeks(e.g. Equity, Jubilee) as investors remain cautious of inflationary pressures in the economy(private sector activities have also been weak in recent months as evidenced by the low PMI).



EABL – Long-term Buy

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