[kictanet] Econet finally connected after paying $12m fee

[alice]

Econet finally connected after paying $12m fee

By A STAFF WRITER
The EastAfrican

South African-based mobile telephone operator Econet Wireless has
finally found an entry into Kenya's highly lucrative market after it
was allocated frequencies by the Communication Commission of Kenya
(CCK), ending a bruising three-year battle for a licence.

Its local subsidiary, Econet Wireless Kenya Ltd, announced last week
that it had received the frequencies after it paid the $12 million
(Ksh840 million) balance of its licence fee earlier this month.

The company said it was now preparing for rollout of it services,
effectively becoming Kenya's third mobile telephone operator.

The balance is part of the $27 million the company was required to
pay before it could be licensed and allocated frequencies.

But the company is entering a market dominated by Safaricom Ltd and
Celtel International — more or less a duopoly where the two players
dictate terms.

In a David and Goliath situation — Safaricom Ltd is the most
profitable company posting Ksh17 billion ($253.7 million) in profits
while Celtel has established a name for itself — Econet can hope that
the CCK finds favour with its appeal and enforces a provision in its
licence that commits regulatory authorities compel its competitions
to provide a level playing field.

But this will only be feasible if the competition allows number
portability and the sharing of basic physical infrastructure,
including base stations.

Number portability allows consumers to retain the same number
regardless of the network they are on at any one particular moment,
but there is no indication that the CCK will introduce and enforce
the requirement and even less hope that the other better entrenched
companies will be willing to give in.

But Econet's ability to roll out its network almost immediately it
receives its licence and frequencies as it had promised remains to be
seen.

Its entry comes in at a time when the sector is undergoing rapid
growth. It has recently witnessed the introduction of CDMA technology
by Telkom Kenya, Popote Wireless and Flashcom.

Econet's hopes of making an impact and quick profits for its
principal shareholders will depend heavily on CCK's ability to
negotiate complex interconnect agreements between multiple players
and set the price for shared infrastructure.

The telecommunications sector is characterised by a large mobile-
phone segment, that has experienced sustained growth, with the number
of subscribers surging at a phenomenal rate.

For the period 2000 to 2005, growth in this sector was a remarkable
105 per cent.

It is estimated that total subscriber numbers hit a new peak of eight
million in December 2006, implying a penetration rate of 23 per cent.

The number of fixed lines remains comparatively low, falling from a
peak of 320,000 in 2002 to 280,000 in 2006. With ongoing deregulation
and a sustained commitment from the government to support the sector,
the business environment is seen as being extremely robust
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