Sunday, July 17, 2011

Africa - 2 out of 10 youngsters cited handset costs as a barrier to mobile phone ownership . Cost of airtime is no longer a barrier

[Business Daily] Schools remain the only barrier stopping the bulk of unconnected youth across East Africa from acquiring mobile phones following the fall in the prices of handsets, a new study has showed, making them a critical market for mobile phone companies.

The study Holla by research firm Consumer Insight on youth aged between seven and 24 years living in urban and peri-urban areas released this week also cites parental restriction as the other hindrance keeping youngsters from getting mobile phones.

Barring students in schools from having mobile phones is one of the measures the government introduced through the Kenya National Examinations Council (KNEC) to curb cheating in examinations and deal with the threat that technology poses in speeding up examination leakages.

"Though cost of handset is still a barrier, it is much less so since only two out of 10 youngsters sampled cited it as a barrier. Cost of airtime is no longer a barrier," said Ndirangu wa Maina, the Managing Director at Consumer Insight.

Calling rates have been falling since August last year as mobile operators seek to grow their subscribers, with the latest and now the lowest offer being from Essar Telecom the operator of the yu brand whose target market is the youth.

The mobile telephony firm on Tuesday started a three-month offer in which all its subscribers will call for free the whole day (6am to 6pm) within its network though it maintained the three shillings per minute for night and calls headed for rival networks. The other operators are charging a maximum of three shillings to call within and outside their networks, which is more than half the prices they were charging last year.

The research shows that if schools allowed students to have mobile phones and only limit their usage in their institutions, then the amount of airtime sold to this group would more than double from the current Sh6.3 billion per month in the region.

Kenyan youth of school going age are the biggest consumers of airtime in the major East African countries, spending Sh3.4 billion per month in airtime alone, which is three times what their counterparts in Tanzania are spending on airtime and almost double what their peers in Uganda are consuming per month.

Ugandans aged below 24 years are consuming Sh1.8 billion worth of airtime every month while their peers in Tanzania are spending atleast Sh1.billion per month to remain connected. This spend by Kenyan youth is a 52 per cent jump from the Sh2.2bilion they were spending in 2009.

This means that the Kenyan youth below the age of 24 are spending about 50 per cent in a year the amount of money the most profitable mobile phone company in the country Safaricom, is making in revenues, making them a critical market for operators seeking new subscribers.

The youth are using this money on their mobile phones mostly to get connected to the internet. According to the research, 35 per cent of the 3600 youth's sampled had access to the internet. Nine out of ten of those youth who were on social networks were connected on Facebook, making the social cite the most powerful networking site for these youth.

"The youth of East Africa are, by far, more switched on and connected than most people would imagine," reads the report in part. "Whereas there were no significant numbers of lines amongst the youth in the region only a few years ago, the situation is now completely different with 52 per cent of all East African youth claiming to have active SIM cards (94 per cent of those have handsets)."

The youth form the bulk of the Kenyan population, with the latest census showing that those aged below 24 years in excess of 20 million more than half of the Kenyan population.

Youth Spend Sh3.4 Billion Monthly On Airtime, Says Study

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