Kenya Telecommunications Q1 2019
A variety of factors support our positive long-term view for the Kenyan telecoms market in this Q119 update.These include a low mobile penetration rate that indicates opportunities for organic subscription growth, as well as rapid 3G/4Guptake - both of which will remain hallmarks of the mobile market through to the end of the forecast period in 2027. The demandfor data will be fuelled by growth in the usage of social networking, music, video and mobile financial services. Safaricom's dominantposition in the market will continue to squeeze its competitors and lead to more knee-jerk reactions like Airtel Kenya’s decision toslash call rates. Such moves may boost its market share in the short term but it is not a sustainable long-term strategy to competewith Safaricom. Recent tax hikes levied on the sector have pushed operators to adjust their pricing structures in order to pass thefinancial burden on to their subscribers. This will negatively impact operators margins in the near to medium term. Anotherdownside risk for the market's growth is mandated SIM re-registration processes, as the market still harbours inactive SIMs thatcould be disconnected at any time. Fixed voice subscriptions seem to be declining at a fast rate and we do not expect operators tomake large investments to improve fixed-line services, as competition is focused on mobile broadband and mobile money services.
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