Kenya Says Telecommunication Industry Changes Will Benefit Users

The Kenyan government supports increased competition in the telecommunications industry to ensure customers are able to shop around for the best service and prices, Communications Secretary Fred Matiang’i said.

The regulator, Communications Authority of Kenya, said last week its board granted approval to license three new telecommunications companies. With the country’s mobile-phone penetration rate at 77 percent, there’s room for even more providers to enter the market, said Matiang’i in an interview.

“It will intensify competition and we may end up getting quality services in the process,” Matiang’i said yesterday in the capital, Nairobi. “Investors will have the opportunity to exercise their creativity and investment capacity,” he said.

The regulator announced last week it had granted conditional approval for the largest network operator, Safaricom Ltd., and Airtel Network Kenya Ltd. to buy Essar Group’s local unit, known as Yu. Orange SA (ORA) said last month it may cut its holdings in Kenya, where it owns a 70 percent stake in the country’s smallest service provider, Telkom Kenya Ltd. The new licenses have yet to be awarded to Finserve Africa Ltd., Zioncell Kenya Ltd. and Mobile Pay Ltd., Communications Authority of Kenya Director General Francis Wangusi said.

“Kenya is a very dynamic and growing market, you cannot say this market is oversupplied,” Matiang’i said. “The better days for this market lie ahead.”

The country of 43 million people had 31.3 million mobile-phone subscriptions by the end of September, of which Safaricom accounted for 20.8 million, Airtel 5.5 million, Essar 2.8 million and Telkom 2.2 million, according to the regulator.

Service Delivery

The joint bid to buy Essar will see Airtel receive the company’s subscribers and licenses and Safaricom acquire the network base stations and transmission equipment.

Safaricom failed to meet the regulator’s quality-of-service criteria in 2012-13, achieving a compliance level of 50 percent, compared with the minimum of 80 percent, which the company must meet to obtain a new license, the regulator said in July.

The government plans to appeal a March 28 ruling by the Court of Appeal that extended the deadline to migration to digital broadcasting until Sept. 30, from mid-year, and invalidated decisions made by the regulator since a new constitution was enacted in 2010, Matiang’i said.

“The repercussion of this ruling would lead to the collapse of the whole sector,” Matiang’i said. “All the spectrum licenses that have been issued since 2010 can be contested, all of them on the basis of that ruling,” he said.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net Sarah McGregor, Emily Bowers

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.