Safaricom Plc – Fixed Data - “The New Growth Frontier” - November 2018
• Fixed Data - “The new growth frontier” is the 5th part of our 6 part series report titled “Is Safaricom losing its grip?”
• In the 1st part - “Pricing Power Explained” we explained the concept of “pricing power” which we defined as the ability of a company to raise prices over time without reducing demand for its products.
• We used the Herfindahl Hirschman Index (HHI) theoretical framework to determine each business line’s concentration levels and mentioned in brief the services in which Safaricom has or does not have pricing power.
• The report identifies the fixed data market as having low market concentration with the Wananchi Telecom the current market leader losing market share rapidly.
• On price wars, we do not see this as a likelihood but see network coverage and service reliability as the main sources of competitive advantage.
• Our conclusion is that Safaricom currently holds some degree pricing power in fixed data business in spite of not holding a dominant market position.
• However, recent market share gains could make it the dominant player in the medium term with a high level of pricing power should the trend continue.
• Fixed data revenues growth will remain strong supported by growth in subscriber numbers and overall market share growth. Download Report