2013 Kenya - Telecoms, Mobile, Broadband and Forecasts

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, 4G;
  • Average Revenue per User (ARPU);
  • Internet development;
  • Broadband, including 3G mobile;
  • Fibre to the Home (FttH);
  • Convergence (voice/data, fixed/wireless/mobile);
  • The emergence of e-commerce, e-learning and e-government services.

Companies covered in this report:

Access Kenya; Africa Online (Telkom SA); Afsat Communications; Alcatel-Lucent; Bharti Airtel (formerly Zain, Celtel); Dimension Data; Essar Telecom Kenya (Yu, formerly Econet); Gilat Satellite Networks; Huawei Technologies; IGO Wireless; Indigo Telecom (Thuraya); Inmarsat; Internet Solutions Kenya (InterConnect); iWay Africa; Jamii Telecom; KenTV; Kenya Data Networks (KDN); Kenya Pipeline Corporation (KPC); Kenya Power and Lighting Company (KPLC); Liquid Telecom; MTN Business Kenya (UUNet); Nation TV (NTV); Nokia Siemens Networks (NSN); OneCom; Safaricom (Vodafone); SimbaNet; Swift Global; Telkom Kenya (Orange, France Telecom); Wananchi Online; ZTE.

Researcher:- Peter Lange
Current publication date:- July 2013 (12th Edition)

Executive Summary

Mergers and acquisitions in Kenya’s second-tier telco market

Kenya’s telecommunications and broadband market has undergone a revolution following the arrival of four fibre-optic international submarine cables, ending its dependency on limited and expensive satellite bandwidth. The country's international bandwidth increased more than fifty-fold between 2009 and 2013. Prices had already fallen significantly following the liberalisation of international gateway and national backbone network provision a few years earlier, 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 (CCK) to consider price caps.

Companies that started out as ISPs have transformed themselves into second-tier telcos 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 and four Fibre to the Home (FttH) rollouts are underway. Advanced services such as IPTV/triple-play, e-commerce, e-learning and e-government are now rapidly evolving. However, the infrastructure investments have been costly and the market has become more competitive, which has led to takeovers in the sector. Several infrastructure sharing agreements have been forged.

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. The country’s incumbent fixed-line telco, Telkom Kenya has embarked on 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. However, the company is still making losses and required a substantial cash injection in 2012 as part of major restructuring program.

A price war has characterised Kenya’s mobile communications sector in recent years, following the market entry of the third and fourth network. This has led to accelerated subscriber growth, but it has also presented challenges to the profitability of the operators, forcing them to streamline their operations and develop new revenue streams in an environment of falling average revenue per user (ARPU) in the voice market. Third generation (3G) mobile broadband services as well as mobile payment and banking services are delivering these additional revenues, but all service segments are highly competitive. For fourth generation (4G/LTE) technology, the Kenyan government is following a unique open-access approach with plans to licence a multi-facetted consortium to operate the network.

This report contains an overview of Kenya’s mobile, fixed-line, Internet and broadband market, its emerging digital economy, profiles of the major players in all market sectors, relevant statistics, analysis, and forecasts for the mobile and internet market to 2014 and 2017.

Market highlights:

  • Unique open-access approach to licensing 4G/LTE network;
  • Price war in the mobile market is threatening profitability;
  • Mobile banking revenue outstrips SMS and 3G mobile broadband;
  • Telkom Kenya undergoing restructuring with major cash injection;
  • Mergers and acquisitions among second-tier telcos;
  • Four separate Fibre to the Home (FttH) deployments;
  • International internet bandwidth has grown more than fifty-fold in three years;
  • Broadband retail prices have not yet fallen as much as wholesale prices;
  • Mobile operators enter the fibre market.

Estimated market penetration rates in Kenya’s telecoms sector – end 2013

Market

Penetration rate

Mobile

78%

Fixed

0.1%

Internet

58%

(Source: BuddeComm based on various sources)

Table of Contents

  • 1. Key Statistics
  • 2. Telecommunications Market
    • 2.1 Overview of Kenya’s telecom market
  • 3. Regulatory Environment
    • 3.1 Kenya Communications Act 1998
    • 3.2 Regulatory authority
      • 3.2.1 Communications Commission of Kenya (CCK)
      • 3.2.2 Independent Communications Commission of Kenya Bill 2011
    • 3.3 Revised Telecommunications Market Structure 2004
    • 3.4 Kenya Communications Amendment Act 2009
    • 3.5 Licence fees
    • 3.6 Universal Service Fund (USF)
    • 3.7 Tariff regulation
    • 3.8 Interconnection
    • 3.9 Number portability
    • 3.10 Spectrum auctions
    • 3.11 Foreign ownership
    • 3.12 Dominant market player designation
    • 3.13 Telecom sector liberalisation in Kenya
      • 3.13.1 Regional telecom licences
      • 3.13.2 Second national operator (SNO) licensing
      • 3.13.3 International gateway licences
      • 3.13.4 VoIP telephony
      • 3.13.5 Converged licensing regime since 2008
      • 3.13.6 BPO subsidies
  • 4. Fixed Network Operators
    • 4.1 Telkom Kenya (Orange Kenya)
      • 4.1.1 Fixed-line statistics
      • 4.1.2 Wireless Local Loop (WLL)
      • 4.1.3 Tariffs
      • 4.1.4 ARPU
      • 4.1.5 Privatisation
      • 4.1.6 The company under France Telecom management
    • 4.2 Fixed-wireless operators
    • 4.3 Kenya Data Networks (KDN)
    • 4.4 Jamii Telecom
    • 4.5 AccessKenya
  • 5. Telecommunications Infrastructure
    • 5.1 National fibre backbone infrastructure
      • 5.1.1 Telkom Kenya, NOFBI
      • 5.1.2 KDN
      • 5.1.3 Kenya Power and Lighting Company (KPLC)
      • 5.1.4 Kenya Pipeline Corporation (KPC)
      • 5.1.5 Safaricom
      • 5.1.6 MTN
      • 5.1.7 Fibre infrastructure sharing
    • 5.2 International infrastructure
      • 5.2.1 Satellite
      • 5.2.2 Terrestrial fibre
      • 5.2.3 Submarine fibre
  • 6. Internet Market
    • 6.1 Overview
      • 6.1.1 Internet statistics
    • 6.2 PC penetration, e-waste ban
    • 6.3 Public internet access locations
      • 6.3.1 Digital Villages
    • 6.4 Internet backbone infrastructure
      • 6.4.1 Telkom Kenya, JamboNet
      • 6.4.2 Alternative data carriers
      • 6.4.3 Public data network operators (PDNO)
      • 6.4.4 Unified licensing regime since 2008
      • 6.4.5 National fibre backbone networks
      • 6.4.6 International fibre, internet bandwidth
    • 6.5 Internet exchange points (IXP)
    • 6.6 Kenya Network Information Centre (KENIC)
    • 6.7 ISP market
      • 6.7.1 Africa Online Kenya
      • 6.7.2 AccessKenya (Dimension Data)
      • 6.7.3 Wananchi Online
      • 6.7.4 MTN Business Kenya (formerly UUNet)
      • 6.7.5 Swift Global (KDN)
      • 6.7.6 InterConnect, Internet Solutions Kenya
      • 6.7.7 Orange Kenya (Telkom)
  • 7. Broadband Market
    • 7.1 Overview
    • 7.2 ADSL
      • 7.2.1 ADSL2
    • 7.3 Wireless broadband
      • 7.3.1 WiFi
      • 7.3.2 WiMAX
      • 7.3.3 Mobile data services
    • 7.4 Broadband via satellite
    • 7.5 Leased lines
    • 7.6 Fibre to the Home (FttH)
  • 8. Digital Media
    • 8.1 VoIP telephony
      • 8.1.1 New VoIP guidelines 2005
      • 8.1.2 VoIP licences
    • 8.2 IPTV, triple play
    • 8.3 Internet TV
    • 8.4 Digital TV
    • 8.5 E-learning
      • 8.5.1 National research and education network (NREN)
    • 8.6 E-commerce
    • 8.7 E-government
    • 8.8 Blogs
    • 8.9 Facebook
  • 9. Mobile Communications
    • 9.1 Overview of Kenya’s mobile market
      • 9.1.1 Mobile statistics
    • 9.2 Regulatory issues
      • 9.2.1 Interconnection
      • 9.2.2 International gateways
      • 9.2.3 Mobile Number Portability (MNP)
      • 9.2.4 Quality of Service (QoS) control
      • 9.2.5 SIM card registration
      • 9.2.6 Taxes
      • 9.2.7 Tariff regulation
    • 9.3 Major mobile operators
      • 9.3.1 Safaricom Ltd
      • 9.3.2 Bharti Airtel Kenya (formerly Zain, Celtel, KenCell)
      • 9.3.3 Essar Telecom Kenya (Yu, formerly Econet)
      • 9.3.4 Orange Kenya (Telkom Kenya)
    • 9.4 Mobile voice services
      • 9.4.1 Prepaid cards
      • 9.4.2 Special regional tariffs
      • 9.4.3 International roaming
      • 9.4.4 VoIP
      • 9.4.5 Flashback
      • 9.4.6 GSM community phones
      • 9.4.7 Price war
      • 9.4.8 Low-cost handsets
      • 9.4.9 Counterfeit handsets
      • 9.4.10 Satellite mobile
    • 9.5 Mobile data services
      • 9.5.1 SMS
      • 9.5.2 MMS
      • 9.5.3 GPRS and EDGE
      • 9.5.4 BlackBerry
    • 9.6 3G
    • 9.7 LTE (4G)
    • 9.8 Mobile money transfer, m-banking
      • 9.8.1 M-Pesa (Safaricom)
      • 9.8.2 ZAP, Airtel Money
      • 9.8.3 yuCash (Essar)
      • 9.8.4 Orange Money
      • 9.8.5 Other services
    • 9.9 Mobile TV
  • 10. Forecasts
    • 10.1 Forecast internet users – 2014; 2017
    • 10.2 Forecast mobile subscribers – 2014; 2017
    • 10.3 Notes on scenario forecasts
    • Table 1 – Country statistics Kenya – 2013
    • Table 2 – Fixed-line statistics – 2013
    • Table 3 – Internet provider statistics – 2013
    • Table 4 – Internet user statistics – 2013
    • Table 5 – Mobile statistics – 2013
    • Table 6 – National telecommunications authority
    • Table 7 – Fixed lines in service and teledensity in Kenya– 1999 - 2013
    • Table 8 – Fixed-wireless subscriptions in Kenya – 2007 - 2012
    • Table 9 – Internet users and penetration rate in Kenya – 1999 - 2013
    • Table 10 – Internet/data subscriptions in Kenya by access technology – 2010 - 2012
    • Table 11 – Internet subscribers in Kenya by operator and market share – December 2012
    • Table 12 – AccessKenya corporate leased-line customers – 2006 – 2012
    • Table 13 – Zuku TV (Kenya) triple-play pricing – 2013
    • Table 14 – Mobile subscribers and penetration rate in Kenya– 1999 - 2013
    • Table 15 – Mobile subscribers by operator and quarterly change in Kenya – December 2012
    • Table 16 – Safaricom ARPU – 2007 - 2013
    • Table 17 – Zain Kenya ARPU – 2006 - 2009
    • Table 18 – Safaricom services revenue composition – 2010 - 2013
    • Table 19 – Forecast internet users – 2014; 2017
    • Table 20 – Forecast mobile subscribers – 2014; 2017
    • Chart 1 - Fixed lines in service and teledensity in Kenya – 1999 - 2013
    • Chart 2 - Internet users and penetration rate in Kenya – 1999 - 2013
    • Chart 3 - Mobile subscribers and penetration rate in Kenya – 1999-2013
    • Exhibit 1 – The CCK coup of 2005
    • Exhibit 2 – Emergency rescue scheme for Lake Victoria
    • Exhibit 3 – Texting elephants
    • Exhibit 4 – Job offers by SMS

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