Safaricom CEO Says Company May Diversify With TV Content

Safaricom Ltd., Kenya’s biggest telecommunications company, may begin selling bundled Internet and television services for on-demand viewing within the next 12 months, Chief Executive Officer Bob Collymore said.

“We will provide aggregation of content and delivery of content,” Collymore said in an interview in the capital, Nairobi, on Nov. 6. “Certainly within the year, we could be playing relatively prominently in that space.”

The offerings, which will be available on devices including tablet computers, mobile phones and television sets, are aimed at tapping revenue streams beyond the company’s core voice service. Competition in Kenya’s telecommunications market three years ago triggered a price war, causing a sharp reduction in mobile-phone call rates that led companies to expand into new lines of data business to attract subscribers.

“We will become a content provider to several forms of media including TV stations and YouTube,” Collymore said, without providing more details. “People want to decide when they want to consume, they don’t want you to tell them. That immediacy is, I think, how the future will be defined.”

Sales growth from M-Pesa, Safaricom’s mobile phone money-transfer system, Internet and text-message services has outpaced revenue from voice for at least the past three years, according to the company’s latest annual report. Still, the share of revenue from phone calls was 60 percent of total sales in the year through March versus about a third for non-voice.

The stock rose as much as 2 percent to a record 10 shillings today before closing unchanged at 9.8 shillings.

M-Pesa Platform

In Kenya, Wananchi Group Ltd., under the Zuku brand, offers packaged high-speed Internet, fixed phone-line services and cable television, while Cape Town-based Naspers Ltd. (NPN)’s Multichoice Africa offers digital satellite-television via its DStv unit.

Safaricom is developing its own platform to handle M-Pesa transactions at a cost of 25 billion shillings ($291.3 million) that should be completed between April and September 2015, eliminating a 10 percent commission it now pays Vodafone Group Plc. (VOD), Collymore said. Vodafone owns 40 percent of Safaricom.

The new platform will double the speed of transactions to 600 per second with the ability to scale up, he said.

Half of all mobile-phone money-transfer payments done globally and about 99 percent in Kenya are processed through M-Pesa, with an average of 550 shillings per transaction, Collymore said. M-Pesa moves the equivalent of 27 percent of the country’s $37 billion gross domestic product, he said.

High-Speed Connections

The company plans to boost its capacity for high-speed Internet connections and faster downloads on its network by rolling out more fourth-generation network infrastructure, Collymore said. 4G networks, also known as LTE or long-term evolution, deliver fast Internet access allowing users to stream video and download music.

“We would like to get that spectrum because we think there is a lot of need for LTE,” he said. “LTE is not there yet because we need spectrum.”

The spectrum will become available when migration to digital broadcasting begins next month in Nairobi and is completed by mid-next year in other towns and cities across Kenya, Collymore said.

“We are asking the government to make sure there is an open, equitable and transparent allocation of that spectrum,” he said. “We will snatch our share when it is available because we are ready to roll LTE.”

Safaricom competes with Telkom Kenya Ltd., jointly owned by the government and France’s Orange SA (ORA), Bharti Airtel (BHARTI)’s Kenyan unit and Essar Telecom Kenya Ltd., a unit of Essar Group of India. Safaricom had 20.1 million mobile customers as of the end of June, giving it a market share of 66 percent, according to the Communications Commission of Kenya.

Safaricom shares have rallied 94 percent this year, outperforming a 37 percent advance in the FTSE NSE 25-Share Index.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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