This archive report was first published on 29 October 2019.
On October 29, 2019, Safaricom made headlines with the announcement of its 'no-expiry data' tariff plans, a move that has left many in the industry scratching their heads.
As an academic and a keen observer of the telco sector, I couldn't help but wonder what drove Safaricom to make this bold move. Was it a genuine attempt to simplify and make data plans more accessible, or was there more to it?
Research suggests that Safaricom may have been motivated by a desire to pre-empt an anticipated push from the local courts. In Ghana, the judiciary had recently ruled that mobile operators should not expire data bundles, and locally, several suits were pending determination on the same issue.
However, Safaricom's CEO has denied any such intentions, stating that the company is simply rebranding in line with its commitment to be simple, transparent, and honest.
But what about the cost implications of this move? A comparison of the tariffs offered for expiring data bundles with those that do not suggests that non-expiry of data comes at a cost – potentially losing 50 percent of your data bundle if you opt not to expire bundles.
However, this rule does not seem to hold at the more expensive, high-end data bundles range. In fact, Safaricom's move appears to be a clever business strategy, targeting the 'kadogo-economy' by breaking down data bundles into smaller, more affordable packages.
While this may seem like a win-win for consumers, it's essential to note that the unit cost of the service is higher for those buying in small quantities as opposed to those buying in bulk. Nevertheless, Safaricom has managed to turn a contentious conversation around expiring data bundles into a business opportunity.
As the telco industry continues to evolve, it's clear that Safaricom's move has set a new standard for its competitors, Airtel and Telkom Kenya. While they may lack the financial clout to sustain losses, they will undoubtedly be challenged to avoid expiring their bundles.
Only time will tell if Safaricom's bold move will pay off, but one thing is certain – the telco industry is living in interesting times.
