Safaricom changes tack on 5G to counter costly phones hitch

Safaricom CEO, Peter Ndegwa (centre) with outgoing Cabinet Secretary Ministry of ICT, Joe Mucheru and secretary to the cabinet Mercy Wanjau during the launch of 5G network at the Michael Joseph Centre last year. [File, Standard]

Safaricom will now target residences and commercial offices in areas that are not currently served by its fibre network as it rolls out its new high-speed internet.

The telco will today commercially launch Kenya's first fifth-generation (5G) mobile internet services after a successful pilot last year.

It is also the first mobile phone operator to offer the service in the East Africa region.

The decision to target commercial offices and residential areas comes after costly 5G-enabled mobile phones slowed down the telco's expansion of the superfast fifth-generation network and sites.

"The retail prices of 5G phones are more than Sh100,000, putting them beyond the reach of most Kenyans," said Safaricom Chief Executive Peter Ndegwa in the company's latest sustainability report.

"Until handsets that can receive 5G are at a sufficient scale from an individual mobile perspective, there is an insufficient need to have lots of sites that offer 5G. "Accordingly, we decided to slow down the 5G rollout in Kenya and focus on the 4G network."

Safaricom reckons targeting areas previously not covered by its fibre network could boost the rollout of 5G. "We know that the 5G network heralds an era of intelligent connectivity and will be a key driver of our strategy going forward as we work to enable digital lifestyles for all Kenyans," said Mr Ndegwa.

The 5G service, which is backed by Nokia and Huawei, is a central part of Safaricom's attempts to further expand its data business to counter slower growth in voice revenues.

The region's most profitable telco is under pressure to diversify its revenue streams from voice, short message services, cash transfers and payments. The telco, part-owned by South Africa's Vodacom and Britain's Vodafone, is keen to create new revenue streams as its voice business matures.

Safaricom earlier announced plans to partner with the government and firms in revving up the 5G mobile internet services, through which it seeks to deepen innovation in sectors such as health and agriculture.

The telco last year launched the upgraded network on a pilot basis in major urban centres including Nairobi, Kisumu, Kisii and Kakamega-all of which routinely witnessed increased data traffic.

Mr Ndegwa at the time foresaw partnership opportunities in telehealth, telemedicine and agriculture through value addition in other sectors and platforms.

"The 5G network heralds the era of intelligent connectivity and will be a key driver of this strategy by enabling us to build on the investments and successes of the last two decades to catapult Safaricom to the next level as we enable digital lifestyles of Kenyans," the CEO said.

Safaricom subscribers who want to use the service will need to acquire new handsets that are compatible with 5G before they can enjoy the super-fast internet, which offers much faster data download and upload speeds that ultimately ease network congestion.

Safaricom has been seeking to capitalise on Kenya's rising mobile internet use. "Growth in mobile data revenue increased from Sh44.8 billion in the financial year 2021 to Sh48.4 billion this year -a good performance in a year in which consumers faced economic pressure generated by the challenges of Covid-19 and escalating food costs," the firm said.

"Additionally, our total market share increased to 65.3 per cent."

The 5G launch follows the December 2015 unveiling of the 4G network.

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