[kictanet] Kenya's state-owned telecoms operator goes mobile

[Mike Theuri]

"Competition is healthy. If other people complain, they should know that
Kenyans
now have a choice," Telkom Kenya Chief Market Officer Bernard Rubia told
Reuters
in an interview.

Rubia says it was "debatable" whether partnering with an outside investor
was
necessary for Telkom to turn a profit. Job cuts that will downsize Telkom to

4,000 employees from 18,000 by September are already realising savings of
250
million shillings ($3.7 million) a month against 1.2 billion in billings.
"We should be given a five-year window to prove ourselves," he said, adding
shares should be sold to the public in the meantime.

================

http://africa.reuters.com/wire/news/usnL19935122.html

Kenya's state-owned telecoms operator goes mobile
Thu 19 Jul 2007, 13:40 GMT

By C. Bryson Hull

NAIROBI, July 19 (Reuters) - State-owned Telkom Kenya is making an
aggressive
foray into the east African country's wireless mobile and data markets,
aiming
for rebirth as a sleek operator before privatisation due to start later this

year.

The loss-making state company, which has a monopoly on landlines, earlier
this
month rolled out the lowest mobile phone tariff in Kenya and stepped up
advertising to bring in customers to its brand-new wireless network.

That has sparked complaints from the other two mobile operators in Kenya,
market
leader Safaricom and Celtel Kenya, who say the state company has an unfair
regulatory advantage.

"Competition is healthy. If other people complain, they should know that
Kenyans
now have a choice," Telkom Kenya Chief Market Officer Bernard Rubia told
Reuters
in an interview.

"And they will choose based on reliability, consistency and affordability."

Telkom may seem an unlikely choice -- customers have long complained that
inefficiency, corruption and monopoly control of landlines have kept
Telkom's
prices high and service poor, but it is now in the middle of a major
restructuring.

And Kenyans are quick to go for the best deal. It is not uncommon for
someone to
have multiple phone lines to take advantage of the cheapest rate or to avoid
the
steep expense of calling from one network to the other.

On a trial run since September, the company's mobile subsidiary Telkom
Wireless
so far has 150,000 subscribers and is adding an average of 1,000 per day,
Rubia
said.

"Our target is by the end of June next year we will have hit our 1 million
mark," he said adding the average customers spends 800 Kenya shillings
($11.92)
a month.

That is dwarfed by the 6.8 million Safaricom has out of an estimated 8-9
million
users in the nation of 36 million people.


BANKING ON CDMA

Telkom has rolled out a CDMA network to about 70 percent of the country to
compete with Safaricom and Celtel, which operate a GSM network like most
mobile
companies in Africa.

Rubia says the choice of CDMA was to lure Kenyan customers who get irritated
by
congestion on the GSM networks.

"One of our towers is equivalent to four of theirs in terms of capacity," he

said.

A second benefit is to cash in on its data capabilities, which are faster
than
GSM. By September, Rubia says Telkom will offer EVDO, a mobile broadband
data
technology.

But like other Internet data providers in Kenya, they will not be able to
use
the maximum capacity until the country gets a fibre optic connection to the
Internet backbone.

Currently it gets it via expensive satellite links that limit bandwidth and
market growth. Rubia says he expects at least one of two projects to give
Kenya
a wired link to the outside world to be ready by "the back end of next
year."

Telkom Wireless customers will be able to access EVDO via mobile handsets
and
also wireless desktop phones.

The latter often serve as Internet links in rural areas where there is
little or
no infrastructure -- and where mobile operators say there are still huge
untapped profits in Africa.

The government wants to sell a 51 percent stake in Telkom to a strategic
partner, with an eye on an IPO that would eventually sell 30 percent to the
public. Proposals are due to be opened by early November.

Rubia says it was "debatable" whether partnering with an outside investor
was
necessary for Telkom to turn a profit. Job cuts that will downsize Telkom to

4,000 employees from 18,000 by September are already realising savings of
250
million shillings ($3.7 million) a month against 1.2 billion in billings.

"We should be given a five-year window to prove ourselves," he said, adding
shares should be sold to the public in the meantime.
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