According to reports users of Safaricom have so far accumulated 5.7 billion Kenyan Shillings worth of data, SMS and airtime that was not used in the year which ended in March of 2021, after the telecommunications giant removed expiry dates on all its services.
This news signifies a 24 percent jump from the prior figure of 4.6 billion Kenyan Shillings worth of unused services from the telecommunications company which it recorded in the previous year.
According to Safaricom the value of unused airtime increased from 2.5 billion Kenyan Shillings to 2.6 billion Kenyan Shillings. As for resources like data, SMS, and airtime which were not utilized the value increased to 3.1 billion Kenyan Shillings from 2.1 billion Kenyan Shillings.
The telecommunications giant; Safaricom via its recent annual report made it known that, “During the year the group introduced the no-expiry products under the Neo theme to ensure customers get value for what they buy.”
It added that, “As a result, the value of unutilised resources increased… as subscriber liability as at 31 March 2021 went up in line with IFRS 15 revenue recognition requirements.”
Safaricom keeps track of the revenue from its users as soon as they utilize the SMS bundles, data bundles, and airtime that they purchase. Prior to said resources being utilized they get classified as liabilities. Safaricom does not however make any payments due to the fact that the services either remain in its books or reduce as the users utilize them.
Safaricom’s introduction and implementation of No Expiry for its services in the past made it possible for the telecommunications company to supercharge its sales due to the fact that users had a fixed timeline with which to spend said services usually a month, a week, or a day. Once the period elapsed, said services expired.
Now Safaricom users who purchase any of its No Expiry services are provided with the option of not using them at all over longer periods of time. Safaricom in addition, provides services with expiry dates and markets those options to users as well with longer talking time, more SMS, and significantly more data.
During the period under review the value of Bonga Points which are Safaricom’s loyalty points program, increased from 3.9 billion Kenyan Shillings that was the case in the previous year, to 4.2 billion Kenyan Shillings. This occurred despite the telecommunications giant offering its users a number of more options that can be utilized by redeeming bonga points including being able to send the bonga points to other Safaricom users.
In October of 2019 the telecommunications company introduced its no expiry data bundles and airtime bundles after its users expressed their displeasure to the point where it ended up in court.
In the same October of 2019 Adrian Kamotho who is an ICT practitioner and Lawyer sued the telecommunications companies; Telkom Kenya, Airtel, and Safaricom over the loss of unused internet data bundles and the expiry of said internet data bundles.
Telkom Kenya, Airtel, and Safaricom in response, decided to introduce airtime and data bundles that do not expire. The decision was implemented even before the court case had been decided.
The demand for telecommunications products that do not expire has also began to increase in other parts of Africa. In South Africa for example its telecommunications regulator implemented new rules in February of 2021. Said rules now make it a requirement for telecommunications operators in the country to make it possible for their users to roll over any unused data.
After a widespread public outcry by its users Vodacom which is the parent company of Safaricom had no choice but to also roll over expiring internet data.
During the period under review the net earnings for Safaricom, experienced a drop by 6.8 percent to arrive at 68.6 billion Kenyan Shillings as a result of the Coronavirus pandemic which had a major negative impact on the revenues of its services like calls and its mobile money service; M-Pesa.
The revenue for M-Pesa dropped by 2.1 percent to 82.64 billion Kenyan Shillings. For its voice service, it dropped by 4.6 percent to 82.55 billion Kenyan Shillings.
According to Business Daily Africa, Safaricom admits that the online messaging services like WhatsApp, Telegram and others, are being a major source of competition to the SMS and voice sectors.
In the words of Safaricom, “Voice calling and SMS messaging have been declining for years worldwide due to mainstream adoption of messaging apps such as WhatsApp, which offer more features at lower prices, such that voice and SMS services now account for 38.4 percent of service revenue.”
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