By Kenneth Kwama

At 12 years, Kenya’s largest mobile company by subscriber base, Safaricom, seems to be exhibiting all the symptoms of an adolescent — the period when people grow really fast and could sometimes, be a little raucous.

Its latest offer, code-named Okoa Jahazi, which seeks to offer Sh50 phone credit for customers in situations where they can’t immediately purchase airtime or during emergency, is an example of the company’s delve into the latest trends.

Goings on in the mobile phone industry are at peak levels as competitors try to outdo each other in reaching the lower segments of the market.

But the offer is as unprecedented as the big headway it is projected to make in the lower segment of the market, popularly known as ‘please call me’ market.

The new service, already billed the very heart of the mobile provider’s business empire, will initially allow pre-pay subscribers to access a Sh50 credit advance and repay within 72 hours (three days) with the subsequent top-up. Subscribers will also pay a Sh5 service charge on top.

The significance of this goes way beyond the company’s growth rate.

For almost a decade, it has set the agenda for the mobile industry, the most dynamic slice of the Kenyan economy, leaving competitors to play the ‘me too’ catch up.

Now, with its 12 million subscribers, the mobile company, in one sweep, could have transformed into a big bank, offering credit that is sure to attract millions of suitors and open up another fresh stream of revenue.

But the company’s Chief Executive Officer Michael Joseph says it’s not prudent to equate the service with that of a bank.

"Which bank offers credit for Sh50?" quips Joseph. "It is a service meant to add more value to our customers and that is how people should look at it."

All this has the industry’s best and brightest pencilling in estimates for Safaricom that would have been an insult a few years back.

Never mind single digit revenue growth. The optimistic forecast is that the new credit service could grow the company’s revenue by more than 10 per cent over the next few years.

"Ideally, it is like giving a loan of Sh50, repayable with an interest of 10 per cent over a period of three days. However, there is no cash involved in the loaning, but still Safaricom stand to make double gains — increasing its turnover from an idle capacity and earning a 10 per cent commission.

Assuming Safaricom gets one million people to use the service every day, it will be loaning people up to Sh50 million per day and earning a daily interest of Sh5 million," says an industry insider who requested not to be named.

According to our source, interest paid on the conservative figure would total Sh1.83 billion annually — an amount equal to what two big banks - Commercial Bank of Africa and Southern Credit made in profits in the last financial year.

The biggest challenge to Safaricom’s latest innovation - Okoa Jahazi, are subscribers in the lower end of the market - referred to as squatters because they own several SIM cards from different providers, which they continue swapping to take advantage of the myriad sweetheart call offers.

So, how will the company deal with people who swap SIM-cards after receiving the Sh50 credit?

"A subscriber who does not repay within 72 hours will not be allowed to use the facility again for a period of 30 days, while those with a pending balance will not be able to make another request.
"Initially, the service will be available to subscribers who have been on the network for at least 12 months, and whose usage for the previous week is more than Sh50," says Joseph.

After about one-decade of outracing the market, Safaricom is expected to become even more intimidating to its competitors and Joseph says the innovation is not the last people are seeing from the mobile provider.

"We are doing what we ought to be doing - investing in new segments while maintaining the core business. There are more things coming," says Joseph.

So where did Safaricom get the idea?

According to Joseph, the idea originated from a phone company in Egypt. He says his firm decided to try out the idea because it was working well in Egypt and was suitable for the local market.

Important innovation, says Joseph, is not simply dreaming up a new idea but also refining it enough to get the market going for it.

Today, Safaricom is pushing hard on many fronts. With a number of services on its plate, including popular money transfer service, M-pesa, the mobile firm is more relevant now that it was a decade ago.

A look down at the list of its offerings provides intriguing insight into the company’s concept of innovation.

In the past few years, the company has introduced a number of services, including Safaricom Live - a content download platform for digital media such as applications and games, ringtones, music, video clips, wallpapers, images and text (news, horoscopes, and jokes amongst other).

It has also ventured big into data, providing subscribers with 3G technology, which is third generation of mobile phone standards and technology.

It enables the company to offer users a wider range of more advanced services, while achieving greater network capacity. The services include telephone and video calls, and broadband wireless data for Internet connections. With Sh17 billion it made as profits in the last financial year, Safaricom could buy its way to even faster growth. Indeed, for some time there’s been speculation on that direction with word going round that it was negotiating to take over Information Technology company - Access Kenya Ltd, as a strategy to grow its data business further, but Joseph said this is false.

"No, that’s not true. We are not talking to the company," said Joseph.

But without such acquisitions, however, Safaricom may struggle in new markets like data, given the shortcomings of the ‘me-too’ approach.

Critics may carp, but the company has been lurching so fast with innovation that some of its competitors have built bits of their services on its creations.

In a way, that means that while new services like ‘Okoa Jahazi’ are giving it a chance to make more money, it also affords its competitors opportunity to start similar services.