Kenya’s telecommunications sector is undergoing a silent but significant transformation, with traditional SMS revenues taking a sharp hit as consumers increasingly migrate to internet-based messaging platforms.
A new report by the Communications Authority of Kenya reveals that telcos lost approximately Sh354 million in messaging revenues within just three months, highlighting a structural shift in how Kenyans communicate.
SMS Revenue Decline Signals Changing Habits
The report shows that total SMS traffic dropped to 14.4 billion messages in the final quarter of 2025, down from 14.7 billion in the previous quarter.
This decline comes despite sustained growth in mobile usage overall—an indication that users are not communicating less, but rather switching platforms.
Over-the-top (OTT) messaging services such as WhatsApp and Telegram have become the preferred choice for many Kenyans, offering free or low-cost messaging over internet connections.
As a result, SMS—once a core revenue stream for telecom operators—is steadily losing relevance.
Falling Prices, Shrinking Margins
Another factor contributing to declining revenues is pricing pressure.
The average SMS rate in Kenya now stands at just Sh1.18 per text, with some operators offering rates as low as Sh1.15. This narrow pricing range reflects intense competition among telecom providers.
Major players such as Safaricom and Airtel Kenya continue to dominate the SMS market, but even their scale has not insulated them from shrinking margins.
The result is a low-margin environment in which SMS profitability is increasingly difficult to sustain.
Data Growth Fails to Offset Losses Fully
While SMS revenues are declining, data usage is rising rapidly.
Smartphone penetration reached 48.7 million devices, expanding access to internet-based services. This growth has driven increased consumption of messaging apps, social media, and other digital platforms.
However, analysts warn that the gains from data services are not fully compensating for the losses in SMS revenue.
Unlike SMS, which required minimal infrastructure investment and delivered high margins, data services come with higher operational costs and more complex pricing models.
Telcos Shift Strategy
Faced with these changes, telecom operators are rethinking their business models.
Rather than relying on standalone SMS services, many are now focusing on bundled offerings that combine voice, data, and messaging.
This shift reflects a broader industry trend: moving away from traditional telecom services toward integrated digital ecosystems.
Additionally, SMS is increasingly being repositioned as a utility service rather than a primary revenue driver.
SMS Still Holds Strategic Value
Despite the decline, SMS remains an important component of Kenya’s digital infrastructure.
Banks, government agencies, and businesses continue to rely on SMS for:
- One-time passwords (OTPs)
- Transaction alerts
- Security notifications
These use cases ensure that SMS will not disappear entirely, even as consumer messaging habits evolve.
