Publication Overview
This annual report provides a comprehensive overview of trends and developments in Kenya’s telecommunications market. Subjects covered include:
- One of the most competitive mobile markets in the region;
- Key statistics;
- Market and industry overviews;
- Government policies affecting the telecoms industry;
- Market liberalisation and regulatory issues;
- Telecoms operators – privatisation, acquisitions, new licences;
- Major players (fixed, mobile and broadband);
- Infrastructure development;
- Mobile voice and data markets, including 3G;
- Average Revenue per User;
- Internet development;
- Broadband, including 3G mobile;
- Convergence (voice/data, fixed/wireless/mobile);
- The emergence of e-commerce, e-learning and e-government services.
Researcher:- Peter Lange
Current publication date:- March 2011 (10th Edition)
Next publication date:- March 2012
Executive Summary
Massive jump in mobile data revenue from broadband and m-banking services
Kenya’s telecommunications and broadband market is undergoing a revolution following the arrival of three fibre-optic international submarine cables in 2009 and 2010 (Seacom, TEAMS and EASSy), ending its dependency on limited and expensive satellite bandwidth. Bandwidth prices had already fallen significantly following the liberalisation of international gateway and national backbone network provision in 2005, but they have now fallen by more than 90%, enabling cheaper tariffs for telephone calls and broadband internet services. However, ISPs have only reluctantly passed on the cost savings to end customers, which has prompted the industry regulator, the Communications Commission of Kenya to consider price caps. In parallel, the regulator has mandated price cuts on interconnection tariffs and proposed new competition regulations.
Companies that started out as ISPs – such as AccessKenya, Kenya Data Networks (KDN) and Wananchi – are transforming themselves into second-tier telecom companies by rolling out national and metropolitan fibre backbones and wireless broadband access networks, offering converged voice, data and video/entertainment services. At least six major deployments of WiMAX technology are underway, and third-generation mobile broadband services with up to 7.2Mb/s have been launched. Advanced services such as IPTV/triple play, e-commerce, e-learning and e-government are now rapidly evolving.
The country’s incumbent fixed-line telco, Telkom Kenya, is revamping its infrastructure and services under the Orange brand with fresh capital from its new majority shareholder, France Telecom, and it has also re-entered the mobile market. A simplified and converged licensing regime introduced in 2008 has lowered the barriers to market entry and increased competition by allowing operators to offer any kind of service in a technology- and service-neutral regulatory framework. Several fibre infrastructure-sharing agreements have been forged.
A price war has characterised Kenya’s mobile communications market since 2008, following the market entry of the third and fourth network, Econet Wireless Kenya (in which India’s Essar acquired a stake), and Telkom Kenya under the Orange brand. Subscriber growth is now forecast to slow gradually over the coming years, and rapidly falling ARPU levels have driven one of the incumbents, Zain (which was subsequently acquired by Bharti Airtel), deeper into negative earnings, leaving only the market leader, Safaricom, with a net profit, although reduced. Financial performance has improved again in the 2010/11 financial year.
The operators are developing new revenue streams from third generation broadband and mobile banking services. The leading operator has begun LTE trials. With market penetration rates in Kenya’s broadband and traditional banking sector still very low, the mobile networks have an opportunity to relive the phenomenal growth rates seen in the voice sector in recent years.
This report contains an overview of Kenya’s mobile, fixed-line, internet and broadband market, profiles of the major players in all market sectors, relevant statistics, analysis, and mobile subscriber forecasts for 2013 and 2016.
Market highlights:
- Decreasing ARPU under intense competition between four mobile networks;
- Improving financial performance despite price war;
- Jump in mobile data revenue from broadband and m-banking services;
- Arrival of international fibre bandwidth in 2009 and 2010 has revolutionised the market;
- Competing national fibre backbones enabling converged voice, data and video services at lower prices;
- Profiles of major players in all market sectors;
- The rebirth of Telkom Kenya under the Orange brand;
- The emergence of new second-tier telcos;
- Fibre infrastructure sharing agreements;
- LTE trials;
- Forecasts for Kenya’s mobile market to 2013 and 2016.
Estimated market penetration rates in Kenya’s telecoms sector – end-2011
|
Market
|
Penetration rate
|
|
Mobile
|
70%
|
|
Fixed
|
0.5%
|
|
Internet
|
35%
|
(Source: BuddeComm based on various sources)
Data in this report is the latest available at the time of preparation and may not be for the current year.
