Online messaging apps put pressure on once-dominant texting

By JOHN MUTUA
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Summary

• The latest industry data shows the number of text messages sent and received decreased to 12.7 billion in the year through June of this year, a sharp drop of 36.4% from a period similar in 2020.
• The shift to new platforms has been both a burden and a blessing for telecommunications companies.
• CA data shows that texting contributed 18% of total mobile service revenue in 2018, which amounted to Sh 264.4 billion.

The increased preference for messaging platforms like WhatsApp, Telegram, and Facebook Messenger is rapidly pushing the once popular SMS into obsolescence as consumers turn to cheap but more user-friendly and convenient options.

The latest industry data shows the number of text messages sent and received decreased to 12.7 billion in the year through June of this year, a sharp drop of 36.4% from a period similar in 2020.

Data from the Communications Authority (CA) shows SMS numbers have declined quarter-over-quarter since June of last year.

From a peak of 20.09 million in June last year, the number of text messages sent and received in the country fell to 16.98 million three months later and to 14.18 million in December.

The shift to new platforms has been both a burden and a blessing for telecommunications companies. As they feel the heat of their underperforming text revenue streams, the platforms are helping to boost usage of their mobile and fiber internet services.

“There are still many opportunities for voice and messaging to be explored despite strong competition from direct competitors and the cannibalization of Internet Protocol (IP) messaging platforms such as WhatsApp,” Safaricom says in its annual report for the fiscal year ended in March.

Income basket

The contribution of SMS to telecom operators as a share of total revenue has declined over the past three years, while the contribution of mobile and fixed data has increased.

Data from CA shows that SMS contributed 18% of total mobile service revenues in 2018, which amounted to 264.4 billion shillings, behind data (landline and mobile) at 20% and voice which accounted for 39%.

In 2019, the contributions of SMS to the basket of revenues of telecom operators fell to 7.1% while the share of mobile and fixed data rose to 21.9%. Telecommunications companies made 276.6 billion shillings from mobile services.

Last year, the share of SMS contributions fell further to 5.8% while that of mobile and fixed data fell to 24.7%. Voice revenues accounted for 35.8 percent. Telecommunications made 280.1 billion shillings during the period.

Along with convenience and usability, the shift to online messaging applications is being fueled by affordable data plans for mobile and fiber-optic internet, and inexpensive deals for smartphones.

“Smartphone adoption continues to rise, driven by falling prices and allowing more people to access mobile internet,” Safaricom said in its March report.

Low-end 4G-compatible smartphones cost on average between 5,000 and 6,000 shillings, making it easy for most Kenyans to acquire the handsets.

And with the appetite and revenue from text streams declining over the years, carriers have stepped up their investments in fixed data connections, diversifying revenue streams to take advantage of the change.

Telecom operators have stepped up their investments in the fixed data market with connections increasing 18% to 734,329 in June from 619,579 a year ago.

Safaricom leads fixed data connections for homes, businesses and offices with 269,397 connections, or 36.7% of the market, followed by Zuku, owned by Wananchi, with 217,300 connections or 29.6%, while that Telkom Kenya had 4,361 connections or 0.6% in the year ending June.

Telecommunications operators have previously turned to SMS promotion, where subscribers had a chance to win smartphones and airtime in order to win over more subscribers in the SMS world.

SMS was once cheaper and more convenient to reach people living in remote areas, but subscribers can chat and call using free WhatsApp, increasing the appeal of the platform.

The increase in fixed data connections and mobile data subscriptions of 5.16 million out of 46 million in the year through June highlights the rise in popularity of online platforms like WhatsApp.

Mobile data subscriptions have also increased.

In June, mobile data subscriptions stood at 46,002,220, up from 40,832,642 a year ago, with Safaricom holding 68% of this market share, followed by Airtel at 26.6% and Telkom Kenya ( 4.6%).

Safaricom, which launched 5G technology in March with 15 sites in Nairobi, Kisumu, Kisii and Kakamega, says it wants to increase the number of cities covered by its high-speed internet to 200 by the end of December and market the super-fast services l ‘next year.

Safaricom aims to increase its data business to offset the slow growth in voice, where weak revenue growth due to saturation has forced the company to look to M-Pesa and the internet to fuel future growth.

Airtel Kenya — Safaricom’s closest local market rival recently upgraded 600 network sites to meet fifth generation (5G) mobile internet service capabilities for the deployment of ultra-fast services in urban centers .

The phone company is betting on network upgrades to bolster its data business and offset sluggish growth in mobile calls, where it is experiencing weak revenue growth due to saturation.

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