Safaricom Countrywide Network Outage could have multiple effects on the telco giant

Safaricom subscribers were unable to make calls, access data as well as carry out M-Pesa transactions yesterday due to a technical fault within the telco’s network services countrywide.

“We’re having a technical issue that’s affecting a number of core services in our network. We’re working on resolving this as soon as possible,” confirmed Safaricom via their official twitter handle @Safaricom Limited.

The network outage affected over 26.6 million Safaricom subscribers countrywide. The telco giant has said they are working toward restoring the services that have been interrupted on Monday morning.

Confirming the technical hitch that affected Safaricom Customers for over two hours, Safaricom CEO, Bob Collymore said in an audio statement posted on Sound Cloud, that the telco giant lost its connectivity in both its core-network as well as its redundant path.

“This shouldn’t happen. It is unusual that the core-network and the redundant path fail. Our customers lost voice, text and data services as well as M-PESA Services. Now the technical team kicked in place temporary, it went up and went down again. It has come up again. It has since come up and customers can use the services although there is a little bit of a back up,” he added.

He further stated that the company was investigating how the redundancy link also failed and would ensure that they put things in place to avoid a reoccurrence. The outage lasted for over two hours which according to the Communications Authority of Kenya (CA)- the telco’s regulator exceeded the maximum downtime for a telco of one hour unless otherwise which may lead to serious penalties as per the license conditions.

He further stated that the company was investigating how the redundancy link also failed and would ensure that they put things in place and ensure it does not happen again. The outage lasted for over two hours which according to the Communications Authority of Kenya (CA), who is the telco’s regulator, the maximum downtime for telco should be one hour, unless otherwise. This may lead to serious penalties as per the license conditions.

“We are waiting to get an explanation of what happened. However, we are trying as much as possible to empower all sector players so that in the circumstances like this we may not have the country in complete communication breakdown,” said Director General Communications Authority of Kenya, Francis Wangusi.

He added that depending on the brief given by Safaricom they will be able to determine what regulatory action they will take.

According to the Communication Authority Sector Report 2016/2017, the total number of mobile money subscriptions and mobile money agents across all networks were recorded at 31.0 million and 169,698 respectively during the quarter under review. A total of 400.6 million transactions were made valued at over Ksh.1 trillion. Safaricom M-PESA transactions taking a lead to stand at a transaction value of upto 851 billion.

Not only did the downtime affect the Safaricom subscribers, Safaricom revenues rely heavily on M-pesa, Voice and Data platforms, with this in mind, it is obvious that the outage must have caused a major toll on Safaricom Revenues as well. According to Safaricom’s Annual Report 2016, Safaricom revenue stood at 98.4 billion where voice revenue accounted for 45.7 billion. On the other hand M-PESA transactions grew by 33.7% to reach 25.9 billion.

According to the same report the company projects to hit Ksh.200 billion in revenues by end of this financial year. If that’s the case, Safaricom could have lost over Ksh 40 million in revenues during the two hour downtime.

According to the Bloomberg Terminal, the effects caused by the downtime could be felt already as Safaricom shares went down by 0.3% to 19.10 shillings as at 3.00pm yesterday lowest since April 7 where the shares closed at 18.65 shillings.