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Management Report
Published: June 2010
Pages: 78
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 353.33  Buy Now!
Research from: telecomsmarketresearch
Sector: Networks & Infrastructure

BMI’s Q310 update of the Kenya Telecommunications report has seen little change to our forecasts for the next five years to 2014, as the end of 2009 results, those that are published anyway, largely confirm our expectations for the start of the year, and our forecasts for Kenya growth in general have not changed. One thing that has changed is the broadband forecast. Mobile services, in the form of Safaricom’s 3G mobile dongles, have become a massive part of the broadband landscape, overtaking fixed broadband connections. BMI has made the decision, across all of our reports, to include the 3G forecasts into the broadband forecast. Of course they are also kept separate as a mobile service that is important to mobile operators, but as they also compete directly with other broadband providers, we feel it is important to include these expected connections here as well. BMI’s Q310 update of the Kenya Telecommunications report has seen little change to our forecasts for the next five years to 2014, as the end of 2009 results, those that are published anyway, largely confirm our expectations for the start of the year, and our forecasts for Kenya growth in general have not changed. One thing that has changed is the broadband forecast. Mobile services, in the form of Safaricom’s 3G mobile dongles, have become a massive part of the broadband landscape, overtaking fixed broadband connections. BMI has made the decision, across all of our reports, to include the 3G forecasts into the broadband forecast. Of course they are also kept separate as a mobile service that is important to mobile operators, but as they also compete directly with other broadband providers, we feel it is important to include these expected connections here as well.

Kenya is doing unusually well as a 3G market, with an estimated 2.05mn users at the end of 2009. This should pull up even further as the other operators enter the market. There is some difficulty and controversy about this. Zain, Orange and YU are campaigning for the 3G licence fee to be lowered below the US$25mn that Safaricom originally paid. Safaricom of course argues that, if they do not pay as much, then it should get some money back. It could be said that the leading operator was laying a premium for first mover advantage, something it has certainly enjoyed. Zain said it is already rolling out its 3G infrastructure, confident that it will have its licence soon, though BMI is not convinced that it will not be hit with the full US$26mn bill.

Zain has in general not been doing well. It continues to lose market share and has very recently announced a new strategy, to focus more on the mass market, where it has previously concentrated more on high-end users.

Speaking of high-end user, the broadband suppliers of Kenya are continuing to expand their services. With the entrance of the Kenya Power and Lighting Company into the wholesale side of the broadband and data business, offering backhaul capacity along some key routes to other operators, the overall highspeed data capacity within Kenya is moving in the right direction. Still, services remain expensive, although all the new developments, better national connections and the advent of international highcapacity fibre cables are contributing small pieces to the puzzle that will eventually see internet access become a much more common experience in Kenya.

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