Kenya in hunt for third mobile player

17 Apr 2003

Kenya’s telecoms regulator, the Communication Commission of Kenya (CCK) says it has pre-selected five consortia bidding groups to tender for the country’s third mobile GSM concession, though it rejected an application from Roma Telecom which failed to meet minimum stipulated requirements. The five successful groups are: Econet Wireless Group of South Africa, comprising Econet Wireless Holdings of Zimbabwe and UK registered Econet Wireless; Mobile Systems International Cellular Investment of the Netherlands; Kenya Telecommunications Investment Group, a partnership between Germany’s Detecom International and Kenya Telecommunications Investment, One Cellular, which is backed by Sweden’s Swedtel and local company A1 Byte Information Technology of Kenya; and Telsar Solutions/Telecel International of South Africa. According to the CCK, the winner of the third GSM concession will be announced in July and the licence awarded in October. The regulator hopes that the new licensee will launch commercial services by February 2004.

Kenya’s cellular market is entering a high growth phase following the introduction of competition in August 2000. Since then, the country’s subscriber base has leapt from 17,000 to 1.1 million by the end of 2002 increasing mobile penetration to 3% and making it the fastest growing market in the region. If the economy picks up as expected, this growth is forecast to continue and support a 10% penetration rate within the next five to seven years. The market is currently served by Safaricom, backed by Vodafone and local fixed line operator Telkom, and Kencell, which launched a rival mobile service for the first time in mid-2000. Safaricom remains the market leader with a 55% market share having reportedly signed up over 740,000 subscribers by mid-January 2003. Growth has been driven, however, by the arrival of Kencell, bringing price competition to the sector and much wider availability. Since Kencell’s launch and following Safaricom’s privatisation, handsets are now subsidised and available on pre-paid packages; more than 95% of subscribers use pre-paid.

Another key factor driving development in the sector is the lucrative roaming revenue earned from serving foreign visitors. In this respect mobile has become complementary to one of Kenya’s biggest industries – tourism. Coverage already stretches along Kenya’s coastline from Malindi through Mombasa to Vanga on the Tanzanian border, for example, and covers the slopes of Mount Kilimanjaro. In August 2002 Safaricom announced the expansion of its coverage to the Masai Mara National Reserve, offering roaming to foreign visitors and providing communications for the resident workforce. But so as not to disrupt local wildlife, or those enjoying it, coverage has been carefully planned to ensure that radio transmissions are restricted to the lodges.

Kenya
CIT’s Yearbook of African Telecommunications 2003