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Essar Kenya Sees More Data Revenue, Market Share Amid Price Cuts

March 8 (Bloomberg) -- Essar Communications Holdings Ltd.’s Kenyan unit, the fourth-biggest cellphone operator in the country, plans to boost its share of revenue from data even as it forecasts prices for mobile Internet services will decline.

Essar Telecom Kenya Ltd. expects data to contribute 12 percent of overall sales within two years, compared with 8 percent now, outgoing Country Manager Atul Chaturvedi said in an e-mailed response to questions on March 4.

“Data pricing is likely to reduce, and this in turn will see an increase in penetration and usage,” Balaji Srinivasan, head of communication at Essar, said today in a separate e-mail. “The majority of our subscribers browse from their handsets and this number has been steadily increasing on a monthly basis. We are also seeing more and more people joining the network.”

Essar, which trades under the yu brand, competes with Safaricom Ltd., Kenya’s largest mobile operator; Airtel Kenya Ltd., the domestic unit of Delhi-based Bharti Airtel Ltd.; and Telkom Kenya Ltd., a division of France Telecom SA. All of yu’s rivals have licenses to operate a third-generation, or 3G, telecommunications network, while only Safaricom has actually built one so far.

3G, or third-generation networks, enable faster data transmission and allow mobile-phone users to download music and video to their handsets. Yu doesn’t have a license to operate a 3G network yet.

“We are on 2.5G, which is good enough for browsing, for mailing,” Chaturvedi said. “3G investment will need to be loaded onto the customer.”

‘Enough’ Handsets

About 12 percent of mobile-phone handsets in Kenya are 3G enabled and yu will begin providing 3G data services when there are “enough” handsets in the country, he said.

Yu, which began operations in November 2008, presently has a network covering 85 percent of the population with 1.63 million customers as of Dec. 31, Chaturvedi said. In December, the company introduced a money-transfer service known as YuCash, which currently has 420,000 users, Chaturvedi said.

The company is in talks with various unidentified Kenyan banks to enable users of the services to be able to conduct transactions using 1,500 automated teller machines across the nation by the end of this month, he said.

Chaturvedi said last week announced he will be replaced later this year by Madhur Taneja, the current chief executive officer of Warid Telecom in neighboring Uganda.

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

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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