The airtime shifts no one saw coming: Safaricom’s one-shilling strategy turns heads 

17th September 2024

In an unexpected yet strategic move, Safaricom has introduced a new option allowing Kenyan users to buy airtime for as little as one Kenyan Shilling. Previously, the minimum purchase was set at five shillings. While this might seem like a minor shift, the implications are significant—both for the consumers and the company itself.

This one-shilling offer may appear to be just another way to assist low-income users, but there is more to the story. As Safaricom extends this option to its M-PESA users, the company is poised to tap into a broader base of micro-transactions that could drive its revenue growth to new heights.

Big Revenue from Small Transactions

The math here is simple but brilliant. According to Business Daily Africa, Safaricom’s decision to lower the minimum airtime purchase is not purely an altruistic gesture. It is, in fact, a savvy business maneuver aimed at boosting revenue from a wider array of customers. By enabling smaller transactions, the telecom giant ensures that even customers with limited resources contribute to its revenue stream.

Safaricom has already made a fortune from small-scale, affordable services, generating over $330 million this year from such low-budget options. For a company with close to 45 million subscribers in Kenya, these seemingly tiny transactions add up quickly—especially in a market where nearly every Kenyan relies on mobile communication.

How Much Can One Shilling Buy?

So, what does one shilling actually get you in Safaricom’s airtime world? Not much, but potentially enough. At peak hours, a voice call costs Sh4.87 per minute, while off-peak calls are priced at Sh2.50 per minute. Sending a text message will set you back Sh1.20. In other words, a single shilling won’t keep you on the phone for long, but it might be just enough for a quick call or a critical text.

ain neighboring South Africa, telecom giant MTN charges up to R2 per minute for voice calls, while SMS messages cost around 50 cents. In comparison, Safaricom’s rates—and now the ability to buy airtime for as little as one shilling—offer a lifeline for low-income users, ensuring they stay connected when it matters most.

More Than Just Airtime: Reverse Calls and Extra Charges

This isn’t the first time Safaricom has introduced creative pricing options. Earlier this year, the company rolled out a new charge for its popular "Reverse Call" service. Customers who make three Reverse Calls in one day are now subject to a fee of Sh0.50 for the third call. While the fee might seem negligible, it has proven to be quite lucrative for Safaricom.

Reverse Call, which allows users to transfer the cost of a call to the receiver, remains a popular service in Kenya. Despite the new charges, the company is reportedly making over $7,700 daily from Reverse Call transactions alone. It’s another example of how Safaricom continues to capitalize on even the smallest opportunities, further solidifying its position as the market leader.

Safaricom’s Dominance in Kenya

Safaricom’s dominance in Kenya’s telecom industry is undeniable. With nearly 45 million subscribers as of March this year, the company commands a substantial portion of the market in a country with a population of 54 million. However, many of these subscribers are likely multiple SIM card holders—a common practice in Kenya due to network preferences and coverage.

Even so, Safaricom’s reach is unrivaled. With its one-shilling airtime option, the company is positioning itself as an essential service provider for everyone, regardless of income. This latest move, along with previous low-cost offerings, solidifies Safaricom’s role in bridging Kenya’s digital divide.

Airtime with a Side of Controversy

While Safaricom enjoys its success, the company hasn’t escaped controversy. During the recent "Gen-Z" protests in Kenya, sparked by the proposed 2024 Finance Bill, Safaricom found itself in the crosshairs of public scrutiny. Protesters claimed that Safaricom was providing private information about demonstrators to the police, allowing for their swift arrest.

The company was quick to deny the allegations, but the accusations struck a chord with many Kenyans, especially given Safaricom’s historical ties to the country’s intelligence services. For a company that plays such a critical role in the daily lives of millions, trust is paramount—and any perceived breaches can have lasting effects.

A Business Move with Wide Implications

Safaricom’s decision to offer airtime for one shilling may appear to be a customer-friendly initiative, but it is also a smart business strategy. By lowering the cost barrier for airtime purchases, Safaricom has made it possible for even the smallest transactions to contribute to its overall revenue. It’s a clever way to ensure that no user is left behind, while simultaneously reinforcing the company’s bottom line.

This move isn’t just about making airtime accessible to low-income users; it’s about reinforcing Safaricom’s dominance in the Kenyan market. As mobile services continue to evolve and become more integral to daily life, Safaricom is ensuring that it remains at the forefront of Kenya’s telecommunications landscape.

The Broader Context: African Telecom Trends

The trend of offering affordable services isn’t limited to Kenya. Across Africa, telecom companies are looking for ways to expand their reach into underserved communities. In South Africa, for example, companies like Vuma are rolling out affordable internet packages in high-density, low-income areas. These efforts aim to reduce the digital divide, making essential services more accessible to all.

Safaricom’s one-shilling airtime option fits neatly into this broader trend, highlighting the growing demand for affordable, scalable telecom solutions across the continent. As more people gain access to mobile services, companies like Safaricom are well-positioned to capitalize on this shift—particularly in emerging markets where affordability is key.