Table of Contents
Key Points
• Peter Ndegwa launches Safaricom's Sh1 airtime option to target low-budget users.
• The move aims to increase revenue and expand inclusivity.
• Safaricom maintains its dominance in the Kenyan telecom market under Ndegwa's leadership.
Safaricom, led by Kenyan telecom tycoon Peter Ndegwa, has introduced a groundbreaking feature that allows customers to purchase airtime for as little as Sh1 (approximately $0.0068) through their M-Pesa mobile wallets. This shift from the previous minimum of Sh5 (around $0.034) marks a strategic move by the telecom giant to tap into the low-budget consumer segment, aiming to boost its revenue by making airtime more accessible.
This initiative underscores Safaricom's commitment to inclusivity, offering more flexible options for its vast customer base. Safaricom, in a recent announcement, urged users to explore this newly activated service. The company expressed enthusiasm for the change, emphasizing the significance of even the smallest purchases. In a statement issued on Monday, Safaricom noted, "Hata shilingi ni pesa! Sasa unaweza kununua Safaricom airtime ya kuanzia shilingi moja ukitumia M-Pesa," which translates to, "Even a shilling counts! You can now buy Safaricom airtime starting from Sh1 using M-Pesa."
Peter Ndegwa's vision for Safaricom's growth
Since Peter Ndegwa took over as Safaricom's CEO, he has implemented several initiatives aimed at expanding the company's customer base and enhancing revenue streams. The introduction of the Sh1 ($0.0068) airtime purchase option is a key element of his strategy, focusing on millions of low-budget customers who need more flexible spending alternatives.
Currently, according to Safaricom's tariff structure, voice calls are charged at Sh4.87 (around $0.033) per minute during peak hours and Sh2.50 ($0.017) during off-peak times, while sending a text message costs Sh1.20 ($0.0082). By lowering the airtime purchase threshold, Ndegwa aims to offer more affordable communication options to everyday Kenyans, thus fostering greater loyalty and increasing transaction volumes.
This new airtime model comes on the heels of another revenue-enhancing change: a Sh0.50 ($0.0034 USD) daily charge for customers who exceed their two free calls per day. This adjustment was seen as part of a broader effort to reduce freebies and bolster revenue generation. The Sh1 airtime option complements this strategy by providing cash-strapped users with a convenient way to stay connected.
Safaricom's market dominance under Peter Ndegwa
Safaricom has solidified its dominance in Kenya's telecom market under Peter Ndegwa's leadership. By the end of the first quarter of 2024, the company commanded 65.5 percent of the local voice market, an increase from 63.3 percent in December 2023. This growth came at the expense of its primary rival, Airtel, whose market share fell from 36 percent to 33.96 percent during the same period.
Despite boasting a massive subscriber base of 44.67 million users as of March 2024, Safaricom's revenue growth has lagged behind expectations. One of the key reasons has been the popularity of cost-saving features like the reverse call option, which allows users to transfer call costs to the recipient. This feature, introduced in June 2019, has hindered the company’s ability to fully capitalize on its voice revenue potential.
Nevertheless, Ndegwa remains focused on long-term growth by introducing innovative services such as the Sh1 ($0.0068 USD) airtime option. This move is anticipated to attract budget-conscious consumers, increase daily transaction volumes, and contribute to Safaricom’s overall revenue growth, helping the company navigate its challenges while staying competitive in an evolving market.
Through these efforts, Ndegwa continues to steer Safaricom toward sustained growth, with a clear focus on inclusivity and innovation.
