[kictanet] Data vending hit by poor Internet connections

[Bill Kagai]

http://www.bdafrica.com/index.php?option=com_content&task=view&id=3001&Itemid=5810

Written by James Makau - Business Daily
13-September-2007: The poor penetration of Internet services coupled
with low levels of computer literacy in Kenya are holding back the
country's emerging data vending industry.

The data vendors, who sell and distribute financial and business news,
are targetting rural populations as well as Kenyans in the diaspora.

Mr  Bildad Kagai , the managing director of data vending firm
MediaCorp Limited, told the Business Daily that while data vending has
the potential to be a major industry in the financial services sector,
more needed to be done to ensure  computer services reached majority
of the people.

"Kenyans, especially those outside Nairobi, have been waiting eagerly
for the Real Time data,  but inability to access  the Internet remains
a big challenge," says Mr Kagai

He said  traders  did not have to physically go to the bourse to get
financial data, but they could do this in the comfort of their offices
through the Internet.

He said the highest potential for growth in data vending was in rural
towns and that  lack of  Internet services was limiting the uptake of
online financial news and data.

MediaCorp earlier this month launched its data vending services in
Mombasa  to increase its presence in the country.

Data from  the Communications Commission of Kenya estimates that as of
March, this year,  only 3.2 per  cent of the country's population had
access to Internet up from 200,000 or 0.7 per cent of the population
in 2000.

Internet Service Providers have blamed the low penetration on high
costs of Internet on satellite connectivity which costs up to 10 times
more than the fibre optic connectivity.

But once any of four planned international fibre optic cables land in
Mombasa, Internet connection costs should fall drastically.

The Government's Digital Villages Project under the Ministry of
Information and Communication is also set to greatly boost access,
resulting in more subscribers for data vendors.

And with the Nairobi Stock Exchange set to switch onto a wide area
network (WAN) in the next one month, the potential of data vending
services may well be on its way to be unlocked.

Mr Symon Ndirangu, the chief executive officer of Information
Convergence Technologies ICT Ltd, says that with the signing of an
average of 50 to 100 new users every month,  most of the six data
vendor currently operating in the market should break even within the
next 12 months.

"Although it is taking time for many investors to appreciate the value
of data, we are upbeat that revenue will pick up very soon."

Currently, the cost of a data vending license from the NSE is valued
at Sh170,000 (US$2500) while ISPs are charging about Sh50,000 per
month for connection.
With an estimated Sh180,000 in other costs, data vendors are paying at
least Sh400,000 a month or Sh4.8million annually to stay afloat.

Mr Ndirangu however projects that with the developments in the ICT
sector as well as the Capital Markets, the data vendors should have at
least each have 10,000-20,000 customers utilizing their services.

At an annual charge of Sh5000 per customers, data vendors could easily
rake in Sh50 million in a year.

"The need for investment decisions based on sound finanical
information and data rather than speculation as is often seen today
will spur the growth of data vending services," says Mr. Ndirangu.

With the chairman of the NSE Jimnah Mbaru estimating that the
watershed Safaricom IPO slated for later this year will bring the
number of investors at the bourse to 3 million, the need for real time
data on the stock markets will clearly be there.

Foreign interest in the Kenyan capital markets which has picked up in
last one year following a string of high profile IPOs is an also seen
as a major driver to the success of data vending services.

"Kenyans in the diaspora and international investors who do not have
the luxury of popping into Nation Centre to see the market Viewer will
definitely drive this industry." Reckons Mr. Kagai

It may not be unfathomable then, that local data vendors could enter
the big league of Reuters, Bloomberg and CNBC sometime in the future.

--
--
Bildad Kagai
MD - MediaCorp Limited
Nairobi Stock Exchange [NSE] - Authorised Information Vendor
Suite B2 Tetu Apartments StateHouse Avenue
P. O. Box 20311-00200
Tel. 254 20 272 8332
Fax. Rendered Obsolete
URL. www.mediacorpafrica.com
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