[kictanet] [Fwd: [Fibre-for-africa] Reliance Telecom set to roll into Kenya]

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Reliance Telecom set to roll into Kenya

Reliance Telecom, the Indian telecoms giant which is the process of
building a fibre optic cable between India, through the Middle East to the
eastern coast of Africa, is part of a group which Kenyan authorities have
allowed to take up the SNO slot. A report in Kenya’s ‘Business Day’
newspaper says Reliance, Triton Group (of Kenya) and Swedish
communications firm Swedtel, will this week pay the local communications
authority for the licence which Kuwaiti firm Vtel Communications initially
won.

Reliance hopes to connect Mombasa, Kenya, to the network it is erecting in
the Gulf region in the second half of this year. The cable would then
proceed to link to Mozambique, Tanzania, Madagascar, Mauritius and South
Africa, before end of 2009. Reliance’s entry into Kenya makes their vision
easier to achieve, but may require the architects of EASSy and The East
African Marine Systems (Teams) to return to the drawing board. Or does it?

According to the ‘Business Day’ report, EASSy promoters are in talks with
TATA (a competitor to Reliance in their home market) to help put together
a team that will give Reliance a run for its money. And where does all
this leave the NEPAD eAfrica Commission and the aspiration for Open
Access?

Wakabi

==

Reliance to pay Sh12bn for telecom license
Written by Kui Kinyanjui

India’s Reliance Telecoms and its Kenyan partner are expected to pay
nearly Sh12 billion for the second national telephone licence by the end
of this week. Triton Group, the Kenyan member of the consortium poised to
take up the SNO licence said the group had accepted the Communications
Commission of Kenya’s (CCK) offer to take up the licence that was
initially awarded to a consortium led by Vtel Communications of Kuwait.

India’s Reliance Telecoms and its Kenyan partner are expected to pay
nearly Sh12 billion for the second national telephone licence by the end
of this week.

Triton Group, the Kenyan member of the consortium poised to take up the
SNO licence said the group had accepted the Communications Commission of
Kenya’s (CCK) offer to take up the licence that was initially awarded to a
consortium led by Vtel Communications of Kuwait.

Yagnesh Devani, the executive chairman of Triton Group, told the Business
Daily that the company will pay for the licence on Friday. “Everything is
on course and we have already taken up the offer.”

Paying up for this bill will firmly place on course the process of setting
up a competitor to Telkom Kenya, nearly years since the process started.
The cash kitty will also significantly boost efforts by the Treasury to
raise money it had budgeted for and ultimately reduce government borrowing
from domestic money markets.

This could add further reduce interest rates and strengthen the shilling
as banks and insurance companies — which mostly lend to the government
find themselves flush with money they cannot invest profitably.

Triton and its partner Reliance were offered the opportunity to become
Kenya’s SNO two months ago, after the first placed consortium Vtel failed
to meet regulatory standards and lost its bid.

The last few weeks have seen the regulatory body, CCK, vacillate on
exactly when the offer would be formally taken up by Reliance and its
partners.

As late as yesterday, the regulator would not commit to when the formal
announcement of Reliance’s paying up for the licence would be made.

Delay in making the announcement has raised industry-wide fears that the
battle for the SNO licence would go the way of the third mobile provider
which has been in suspension for the last four years.

The Reliance consortium had to raise an additional Sh4.1 billion ($58
million) for the license above their initial bid of Sh7.8 billion ($111
million), to match Vtel’s bid offer of Sh11.8 billion ($169 million).

It is expected that Reliance will put in an initial investment of around
Sh10.5 billion ($150 million) for the licence, leaving its partner Triton
to foot the rest of the bill.

According to regulation, the consortium will be expected to pay CCK a
substantial amount of the licence fee on Friday to act as a bond for the
licence.

The Reliance Consortium is led by one of India’s largest private telecom
service providers, Reliance Telecoms, and Kenya’s Triton Group.  Swedish
communications firm Swedtel is the technical partner.

The entry of the SNO is expected to significantly add pricing pressure in
the telecommunication market with the possibility of lowering charges and
cutting communications costs across the economy.

A national operator has a combined licence, meaning it can handle both
mobile and fixed lines services as well as operate an Internet backbone.

Under the terms of its licence, an SNO must roll out networks across the
country to help shore up the number of people with access to a phone line,
or tele-density.  United Nations research shows that a one per cent
increase in tele-density can lead to a corresponding increase in a
country’s GDP of 0.3 per cent.

Reliance’s immediate competitor will be Telkom Kenya, which has long
disappointed Kenyan companies and added huge costs to their operations.

Telkom recently rolled out its wireless platform hoping to take advantage
of new revenue streams as consumer interest in land-lines wane.  The
national operator also has plans to privatize this April, which alongside
an upcoming IPO for Safaricom will boost the company’s investment and
infrastructure plans ahead of Reliance’s entry.

The entry of another internet backbone provider is further expected to
lower internet connectivity charges.  Internet prices have been on the
decline since the government began liberalising the information and
communications technology sector three years ago.

Kenyans are expected to benefit from improved access to the internet,
increased bandwidth, and quicker and efficient services.

Reliance is investing a further $1.2 billion on an undersea cable system
linking India to Kenya, a move which should expand its already sizable
global network and provide the company with ready-made infrastructure that
will give it an edge against competitors Telkom, Safaricom and Celtel in
coming months.

Africa is a budding battlefield for Indian telecommunications companies. 
Reliance’s competitor Tata is reportedly in talks with the Eassy fibre
optic cable consortium in a bid to beat Reliance’s .

Friday’s formal announcement of Reliance’s acceptance will see Kenya
narrowly escaping the African SNO syndrome, which is characterized by
licensing processes stalling mid-way and politics.

Senegal is the continent’s most famous case, with its SNO still not
operational six years after the government announced its intentions to
license a second operator.  Politicking around the process has seen the
country’s national operator left with monopolistic control over 80 per
cent of the market.

Malawi’s SNO process has taken almost a year to realize as the country’s
regulatory body continually shies away from committing to a bid on
technical footing.





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