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BMI’s Q410 update of the Kenya Telecommunications report contains analysis of the country’s mobile, fixed-line and internet sectors using latest market data released by the telecoms regulator, the CCK, and service providers. Our forecasts for the next five years to 2014 remain unchanged this quarter, as latest statistics largely confirm our expectations for the start of the year.
The 3G market in Kenya is set to become more active with the allocation of licences to Bharti Airtel’s Zain Kenya and Telkom’s Orange. After an extended battle over the price of the 3G licence, Zain Kenya, along with fellow alternative operators Telkom Kenya and Essar, successfully lobbied for a cut in 3G spectrum prices from the US$25mn Safaricom paid in 2007 to just US$10mn. Telkom Kenya is reported to be trialling a 3G service on a pilot basis at a number of sites in Nairobi. Although it is yet to apply for a licence, the director-general of the telecoms regulator expects it to do so soon, a move he believes will increase the penetration of data services through more competitive pricing. Furthermore, the Kenyan government is reported to have extended a shareholder loan to the operator that will help pay for the 3G licence fee.
Meanwhile, 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. In August 2010, the CCK revised down mobile interconnection fees from KES4.42 (US$0.06) per minute to KES2.21 (US$0.03). The move is aimed at encouraging telecoms operators to lower call tariffs. The CCK aims gradually to reduce the fees to KES0.99 (US$0.013) by 2013. Zain has reacted fastest to the cut in interconnection rates by slashing call rates and SMS costs b y up to 50% and 80% respectively. In June 2010, the CCK initiated the process of mandatory registration of SIM cards and subscribers' details. Kenyan President Kibaki issued a directive in 2009 necessitating SIM registration. The registration of SIM cards will help the government in reducing mobile phone-aided crimes and enhancing national security. Although subscribers were directed to get their details registered by the end of July 2010, failing which their services will be disconnected, no update to this effect was available at the time of writing.
The CCK has announced that the country will introduce mobile number portability (MNP) by December 2010, which will enable subscribers to change their service provider without losing their mobile number. Dutch company PortingXS was awarded a contract by CCK to supply, install, commission and manage MNP services in order to boost competition in the mobile market.
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