Kenya Telecommunications Report Q4 2009

In July 2009, Kenya was all excitement following the big switch-on of SEACOM, the first of at least three submarine cables coming to the country, with the second, TEAMS, to follow fairly soon afterwards.

The expectations of SEACOM and TEAMS are pretty high, and not unjustified, but BMI is expecting some kind of backlash once the honeymoon is over and people realise that improvements in the market in general will be gradual. More and cheaper international broadband is certainly extremely important for Kenya and will have far-reaching benefits, completely transforming the internet experience of Kenya.

However, speeds are unlikely to rocket up over night, and neither are broadband prices likely to suddenly drop through the floor.

The advent of better international connectivity is, nonetheless, certainly going to be very beneficial for Kenya's telecoms market, and for internet in particular. Another positive development that should be good for promoting competition in the broadband internet market is the entrance of the Kenya Power and Lighting Company (KPLC). This company is opening up its power network to allow telecoms providers to lay their own cable, at the same time as it is opening its own fibre network to wholesale access. This should do a lot to increase the level in cable infrastructure, which in turn will help to increase broadband availability and will help to ship all the new exciting international bandwidth all round the country. However, the effects of this new development will also take time to be felt at all.

In the mobile sphere, Q109 saw something of an upset. Zain, which has since then become beset by sale rumours that will have done nothing to help it, had a traumatic quarter, losing over 400,000 from its total subscriber base. Safaricom, too, had a very bad quarter in terms of net additions. While it did get a positive result, it was pitifully small at only 60,000 net additions. These two things combined has meant that, even though the two smaller operators YU and Orange performed well relative to their size, the market as a whole actually lost 17,000 in number this quarter. BMI is not overly worried about this, however, as we do expect growth to pick up throughout the year.

Kenya has done well in our Business Environment Rankings this quarter, thanks to an improvement in its Independence of Regulator score. This reflects the fact that the implementation of the CCK's new unified licencing structure has almost been completed, with many smaller operator beginning to laud the possibilities that this has opened up for them.