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South Africa's Telkom snaps up Kenyan Internet service provider<br>
Sep 29, 2009 <br>
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The local Internet scene could be headed for major realignments as
South Africa's largest fixed-line phone operator, Telkom, silently
sneaks into a territory it has long been yearning for. <br>
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A complex web of share-purchase transactions among telecom operators in
Africa's richest nation, has ended up with the acquisition of a local
satellite data transmission services company, Afsat Communications
Limited. <br>
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After failing to secure a 51 per cent stake in Telkom Kenya late 2007,
Telkom SA Ltd opted to court an Internet Service Provider, MWEB Africa,
a subsidiary of South African media and communications conglomerate
Naspers for a take-over bid. <br>
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Interestingly, the deal was successfully concluded in April this year,
with the firm paying a massive 63m US dollars (4.7bn shillings) for 100
per cent and 75 per cent shareholding in MWEB and MWEB Namibia
respectively. <br>
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The value of the transaction, which ostensibly excluded the South Africa's MWEB unit, has since been kept underwraps. <br>
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Incidentally, MWEB, the Internet solutions arm of Naspers - the company
that also owns Multichoice Africa and popular magazine arm Media 24 -
had bought Afsat Communications, including its subsidiaries in Kenya,
Uganda, Tanzania, Nigeria and Zambia in October 2007. <br>
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This implies the local Internet firm, Afsat Communications, is now part and parcel of Telkom South Africa. <br>
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"AFSAT is now fully part of Telkom South Africa," Mr Job Ndege, General
Manager, Afsat Services Ltd told The Financial Journal Last week. <br>
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"This is an implied acquisition," he said. So far, South African Telkom
owns Nigeria's Multi-Links and Kenya's Africa Online, with plans to
aggressively fund both units. <br>
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The latest acquisition is part of the company's strategy aimed at
reducing dependence on domestic revenues, while expanding further into
Africa to offset dwindling profits at home. <br>
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It is widely argued that the acquisition, together with the company's
investment in Africa Online will increase the value proposition of its
product and service offerings to all customer segments in Sub-Saharan
Africa. <br>
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The acquisition gives Telkom South Africa a foothold in 28 African
countries, making it the biggest satellite-based ISP on the African
continent. <br>
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"We think our value preposition is so powerful that the current terrestrial services cannot match," says Ndege. <br>
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He says the value prepositions of the company's products and services
include reliability, consistency, speed, availability, cost
effectiveness and strong support. <br>
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Afsat Communications offers direct satellite access services to its
clients by utilizing all communications requirements such as backbone
access, backhole access and last mile access. <br>
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In Kenya, Afsat is known for its satellite Internet connectivity solutions to residential and business customers. <br>
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It also supplies corporate and state owned customers with reliable and
secure corporate data network solutions. This service is provided
through VSAT connectivity using the popular iWay brand, which has its
regional headquarters in Nairobi. <br>
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"The response in the market for our products has been very good. We have had an unprecedented growth," says Ndege. <br>
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Amongst the company's main competitors and who are hoping to utilise
the fibre optic cables to provide international Internet connectivity
include Access Kenya Ltd, Kenya Data Network and UUNET Kenya. <br>
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"The fibre optic will provide much capacity. The demand for capacity is
growing, but there have not been enough satellite capacity to provide
international connectivity," says Ndege. <br>
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Kenya's average Internet usage grew by 230 per cent to 700MB last year
from the previous years 304 MB. The fibre optic networks are expected
to supplement satellite in boosting the capacity, since satellite
bandwidth demand in Africa far outstrips the supply from the highly
consolidated satellite fleet operator industry. <br>
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Indeed, Afsat Communications has announced a five-year (2010-2014)
strategic pan aimed at improving and expanding its infrastructure
within East Africa, with a view of ensuring steady and reliable supply
of its products and services. The next phase of the company's growth
will involve setting up additional hub infrastructure to cover the
region of the Sub-Saharan Africa between 2011 and 2015. Already, the
company has built five satellite hubs in Africa. <br>
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Afsat serves Kenya through a distributor network of ISP's such as
Callkey Networks and Virtualsat, by providing last mile connectivity to
remote locations such as Lokichoggio, Mandera, Lamu, Homa Bay, Garissa,
Dadaab, Wajir and Namanga. <br>
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The company also has a large number of VSATs in Nairobi. <br>
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There are over 485 iWay VSAT terminals in Kenya. iWay services are
available in 28 countries in Africa, and its partnership network
consists of 32 distributors, with four subsidiaries in East Africa and
Nigeria. Afsat Communications was formed in 1992 to offer communication
solutions to corporates in East Africa. <br>
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In 2001, the company changed its focus with the re-launch of iWay Brand targeting the whole Sub-Saharan Africa. <br>
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Telkom SA Limited aims to become a Pan-African integrated service
provider that offers international communications and Internet
connectivity, hosting and managed data services, as well as wireless
voice and mobile broadband solutions. <br>
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Over the long term, it plan to provide international data connectivity
to major cities in Africa through regional hubs. It also seek to
position Telkom as a wholesale facilities and infrastructure enabler
for regional incumbents. <br>
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With regards to existing subsidiaries, Telkom SA is focusing on
achieving strong growth through both organic and acquisitive business
development strategies, as well as by leveraging synergies across the
Group. <br>
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For Africa Online, this includes leveraging its available international
capacity to deploy satellite based Internet access, and using Africa
Online as the main vehicle in which Telkom will deliver Internet
services outside of South Africa. <br>
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Source: The Standard website, Nairobi, in English 29 Sep 09 <br clear="all"><br>-- <br>Cheers,<br><br>McTim<br>"A name indicates what we seek. An address indicates where it is. A route indicates how we get there." �Jon Postel<br>