Safaricom to diversify revenue streams amid service stagnation

In a move to offset stagnating revenues from traditional voice and SMS services, telecommunications giant Safaricom is seeking to expand its enterprise software offerings through strategic partnerships.

Safaricom has issued an Expression of Interest (EOI) seeking Software-as-a-Service (SaaS) providers to enhance its suite of cloud-based business solutions for small and medium-sized enterprises (SMEs) in Kenya.

The EOI covers a wide range of applications, including Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), financial management, human resources, stock management, call centre services, and social media tools.

"Safaricom is evolving into a top-tier technology solutions company," the notice seen by The Standard states. "We are developing a comprehensive cloud ecosystem to offer Software-as-a-Service (SaaS) applications specifically designed for the Kenyan market."

The telco said it aims to establish partnerships with established SaaS providers "to bolster its enterprise cloud offerings and deliver integrated, industry-tailored solutions to its customers."

Safaricom envisions becoming Kenya's "preeminent SaaS solutions platform, empowering enterprises with vertically integrated, cloud-based business applications."

The move comes as Safaricom faces stagnating revenues from its core voice and SMS services, which have traditionally been the company's bread and butter.

According to industry analysts, the surge in mobile data consumption and the rise of over-the-top (OTT) communication apps have put pressure on Safaricom's legacy voice and text offerings.

"Safaricom recognises the need to diversify its revenue streams and position itself as a comprehensive technology solutions provider," said industry analyst, Ian Njoroge.

"Expanding into enterprise cloud services, particularly SaaS, is a strategic move to future-proof the business and capitalise on the growing demand for digital transformation among Kenyan businesses."

The EOI outlines Safaricom's goals to establish the company as the preferred SaaS solutions provider for SMEs in Kenya, build a robust portfolio of industry-tailored cloud applications, and create an end-to-end enterprise cloud ecosystem by bundling SaaS offerings with its existing connectivity, infrastructure, and digital services.

Interested SaaS providers are invited to submit their proposals by July 18, 2024, showcasing their capabilities in areas such as "scalable multi-tenant architecture, robust API integration, and advanced analytics powered by artificial intelligence and machine learning."

Safaricom has been eyeing to diversify its revenue streams beyond mobile voice and data, offering services like fixed broadband, fintech, and healthcare.

Safaricom, part-owned by South Africa's Vodacom and Britain's Vodafone, is under pressure to create new revenue streams as its voice business matures.

It has consequently been eyeing to diversify its income from voice, short message services, cash transfers, and payments.

Safaricom said last year it plans to set up an investment subsidiary to acquire promising local startups investing in new areas such as Artificial Intelligence (AI) as it races to diversify and grow new revenues amid slowing profit growth.

Safaricom reckons the startups will help it venture and scale up speedily into new business lines targeting the hugely untapped agriculture, education, and health sectors, in turn earning it new revenue streams, said Safaricom.