Kenya | Technology and Communications

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Success by India’s telecommunications giant Essar Group to acquire controlling stake in Kenya’s youngest mobile provider, yu, could profoundly tilt the mobile market and bring service charges tumbling to unexpected levels.
The acquisition, which will see local holding company Essar Telecom Kenya snap upto 80 per cent stake in yu, significantly means business and investment decisions will now be quicker to reach because Essar no longer has to haggle with any partners before it makes any major decisions. The company also boasts of having a national reach and no longer relies on rival’s infrastructure to carry its call traffic.
Those with doubts about the significance of the move will be answered by Essar Telecom Kenya Chief Executive Officer Srinivasa Iyengar’s disclosure that the company invested close to $450 million (Sh34.6 billion) in the deal, including the cost of nation-wide rollout plan.
This is the single-largest investment by the Indian company since it ventured into the county.
"The acquisition means decisions will be made faster and lenders will be more willing to extend us credit facilities," says Iyengar.
Before the acquisition, Econet Wireless Kenya, which is the local holding company for the yu brand, was 70 per cent owned by Econet Wireless International, while Essar Communications Holdings Ltd, a unit of the Mumbai, India-based Essar Group, owned 49 per cent stake and by extension management rights over the Kenyan operations.
Essar’s deep pockets, coupled with the expected warmer relations with lenders gives yu the financial muscle it needs to court more subscribers, improve its service offerings and launch massive media campaigns to reach out to potential customers. According to yu’s Chief Commercial Officer, Kunal Ramteke, the company will spend close to Sh450 million in the next three months in a massive media campaign to reach out to more subscribers.
"We will tell them about our existence and also inform them that we are the cheapest mobile company in Kenya. We hope to hit a target of two million customers by March next year," reckons Ramteke.
The plan might sound ambitious, but should not be an off target idea for the firm. In its nation-wide rollout programme, the firm completed the exercise a month earlier when many expected it to fail to meet its August target.
special tariff
"Over the next four years, we’ll invest $200 million (Sh15.4 billion) in the business," says Iyengar, adding that yu’s business model is focused on getting the mass market.
The fund will be used to improve the company’s infrastructure and expand its sales channel. It will also be used to promote the company’s brand and develop new products targeted at low-end subscribers.
Already, yu has snapped up a number of subscribers in this category through a special tariff that charges Sh7.50 per minute for the first two minutes of a call in the day. Callers then pay a flat charge of 50 cents per minute for other calls made within the network for the rest of the day.
"This is not a promotional offer. This tariff is a permanent one and we don’t intend to change it," explained Iyengar.
This is the kind of talk, which the company hopes will lure in an additional 1.4 million customers to its network in the next six months and it is confident it can do even better because it is now networked all over the country.
Over the next few years, yu’s pricing and nationwide reach should give it the edge in the areas that offer the greatest growth. It means that in the next few years, rural areas, which have been cited for their potential as emerging markets will be key battlefields for yu and other mobile companies.
Iyengar is confident of winning this battle that he no longer looks over his shoulders for rivals. He expects yu’s ambitious plan lays ground for the midsize operator to challenge Safaricom’s leadership in the lucrative sector in the next two years.
Ad drive
As part of the journey, yu plans to rollout aggressive marketing campaign. It plans to air new commercials in print and broadcast media to drive up subscriber numbers. This will be followed by commercials running during radio broadcasts, which has a wider audience, especially among the rural populace.
It is billed to be the firm’s biggest marketing move since it launched into the country about one-year ago. The campaign includes in-store posters, promotions, outdoor and print advertising as well as digital and music components.The company is hoping the new message will appeal to consumers who are financially and emotionally pressured by the prevailing high rates of mobile calls and difficult economic times.
"yu hopes to help consumers discover life’s simple pleasures," says Iyengar. "Difficult times call for honesty and simplicity. If we can make profit by charging 50 cents per minute for a call, the other players who are charging higher can also lower their charges and make profit."
Already yu’s friendly tariff makes it cheaper to call rival’s numbers than when calling within the rival’s network.
Could this be the momentum the company needed to grow its subscriber base to higher levels?
Iyengar is confident that the intensified competition will reignite growth for mobile companies and the economy. The winner in all this will be the subscriber for whom the full impact of the competition would be felt. Besides the cheaper call rates, the company launched free Short Message Service (SMS) for intra network messages. The free SMS model is a first in the country and could significantly drive up the uptake of its services.
Job cuts
It could be a tall order for the company though, given the general slowdown of the economy. Companies seeking to expand have been experiencing setbacks in sales projections as job cuts, and inflation, eat into consumer purses, slowing down spending. But Iyengar says they are not worried because they offer the best prices in the market. "While others are reviewing their projections downwards, we are reviewing our projections upwards because our model is the best suited in the current circumstances," he says.
Yu has been relying on some of its rivals’ basic infrastructure, including signal masts, and operate only in Nairobi and Mombasa before last month’s rollout.
Iyengar told Financial Journal that Essar was also talking to Dhaby Group, which owns Waridi – a telecom network in Uganda, Democratic Republic of Congo and Ivory Coast with a view of buying it out to increase its presence in Africa.
"The deal is subject to the findings of a due diligence process, which is already underway," says Iyengar

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BPO company nominated for top Europe prize

Kencall has been nominated for a prestigious award, providing a welcome boost to the local BPO sector. /Liz Muthoni




Business Process Outsourcing (BPO) company, Kencall, has been nominated for the non-European Call Centre of the Year Award giving a boost to the country’s global image in this nascent sector.

The firm clinched the award last year, beating participants from India and South Africa. Having local providers recognised and awarded offers the country an opportunity to them as flagship BPO centres when marketing the country.

Nascent industry
Although still at a nascent stage in Kenya, the sector promises job creation opportunities and the nomination comes at a time when the local BPO industry has been undergoing significant challenges ranging from limited access to high Internet bandwidth for use in their operations to weak marketing of their product and service offerings across the globe.

The CCF European Call Centre Awards recognise industry best practice in 20 different categories ranging from Best Use of Technology and Best Multimedia Strategy to the European Call Centre of the Year and CCF Industry Champion awards. Last year’s winners included organisations such as beCogent, British Gas, Capita, Homeserve and Lloyds TSB.

“Winning the award has completely boosted our self confidence, given us that extra bounce in our step and raised the roof on just how high we believe we can soar. It’s simply great. We are ready to go” said Kencall CEO Nick Nesbitt.

Other than boosting the country’s image and profile, the awards ceremony provides ample opportunity for networking as it brings business leaders from all over the world.

It is a forum that enables global business leaders meet the players in different fields and locations to gain an understanding of the nature and quality their operations. This year’s awards ceremony will be held on September 22, 2009 at the Hilton Birmingham Metropole in the UK.

The nominations are made by a CCF European Call Centre Awards judges’ panel.

KenCall has a prestigious and rapidly growing client base within East Africa and a proven track record of success which it is now leveraging as a platform to compete globally and further penetrate the UK outsourcing market.

[mikeotechi]

I think we are going places in terms of technological advancement. Yesterday I had a chat with a Distributor Manager at Kenya Digital Networks(KDN). He confirmed to me that all Kenyan Provincial Headquarters have Fibre Optic Backbone connectivity(am not that sure about Garissa).
He intimated to me that KDN had approached Kenya Power a couple of years ago with intention to use their(KPLCo's) Cable Network to spread internet connection to the whole country. This is a cheap and viable way to reach the whole country without laying an additional cable at enormous cost. This proposal by KDN fell flat because of....(you guessed right),corruption disguised as bureacracy. The network that KDN has now laid across the country has to be recovered from the consumer-the hapless Kenyan.

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Zain Kenya has moved to improve its position in the increasingly competitive data market after it linked with under sea fibre optic cable on the Seacom platform, opening the way for the introduction of new Internet access packages to the prepaid subscribers.

By purchasing capacity in Seacom, the telco has now narrowed the market competitive advantage of its competitors Safaricom, Telkom Kenya and Essar, who are shareholders in TEAMs and have also bought capacity in Seacom.

This now gives it equal ability to offer faster Internet as its competitors and also introduces new services such as unlimited Internet access it has unveiled for prepaid customers and video streaming.

Low reviews
The move sets the stage for a bruising battle for control of the data market which telecommunications and Internet service providers have all set their eyes on to boost their Average Revenue Per User (ARPU) which has been decreasing due to the stiff competition within the voice segment, leading to lowering of tariffs and hitting revenues.

Zain Kenya managing director Mr Rene Meza said the connection to Seacom will enhance availability of bandwidth thereby enhancing data speeds through the significant capacity expansion on the backbone to meet growing demand for Internet users.

“This is critical for real-time services such as video streaming. It will also reduce backbone costs which will eventually bring down the cost to the end-user,” said Mr Meza.

The MD said following an extensive network upgrade that started last year, Internet is now available in all parts of the country. The Zain Kenya network is estimated to reach 90 per cent of the population.

Heavy investment
The move by Zain Kenya to stir interest in data services among the prepaid customers is driven by the anticipated boom occasioned by the arrival of the fibre optic cables.

Despite the mobile telephony subscription growing to more than 16 million, data services have largely been used by corporate clients and customers in the post-paid tariff plans.

Statistics from the industry regulator, Communications Commission of Kenya (CCK) show the country has slightly above 3.5 million Internet subscribers but this is expected to increase to 10 million by 2012 due to the heavy investment in infrastructure in most parts of the country.

Internet is also expected to grow due to the new unified licensing regime that now allows operators to offer a number of services as opposed to one based on technology.

This has enabled operators who could not offer data to users directly to start offering the services, thus cutting the number of layers of providers that was also cited in a previous survey by CCK as contributing to the high costs in the country.
While the satellite bandwidth costs Sh6,000 per megabyte per month, the undersea cable costs Sh400 per month per megabyte and is expected to drop further as other two cables — Eassy and LION — prepare to land next year.

Previously, operators have focused on postpaid services or corporate customers but of late they have been changing strategy by targeting the mass market either through the prepaid subscribers or home users.

Zain Kenya has unveiled two flat rate access packages in a bid to increase uptake of data services for the prepaid customer. The unlimited bundle and pre-paid bundle packages will see customers make up to 90 per cent savings when accessing the Internet.

Users will pay a minimum flat rate of Sh250 to gain unlimited access for a day.

Currently, the cheapest cyber café charges 50 cents per minute, although users complain of slow speeds.

The package is also available for a maximum of 30 days at Sh3,250.

Alternatively, customers will be required to subscribe to the bundled offer at Sh100 for 25 MB but purchase a connection gadget known as USB modem at Sh2,999 down from Sh12,995 loaded with 150MB.

“The relatively high cost of the modem has been a major hindrance to penetration of data services in this market. By making the set up costs affordable, we are optimistic there will be a corresponding uptake of the service,” said Mr Meza.

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[Kenguy]

Originally Posted by mikeotechi

I think we are going places in terms of technological advancement. Yesterday I had a chat with a Distributor Manager at Kenya Digital Networks(KDN). He confirmed to me that all Kenyan Provincial Headquarters have Fibre Optic Backbone connectivity(am not that sure about Garissa).
He intimated to me that KDN had approached Kenya Power a couple of years ago with intention to use their(KPLCo's) Cable Network to spread internet connection to the whole country. This is a cheap and viable way to reach the whole country without laying an additional cable at enormous cost. This proposal by KDN fell flat because of....(you guessed right),corruption disguised as bureacracy. The network that KDN has now laid across the country has to be recovered from the consumer-the hapless Kenyan.

What about major urban areas that arent provincial HQs like Eldoret and Meru?
What are the costs for a KDN connection?

[Kisumu Ndogo]

Originally Posted by desert burner

this thread is dedicated the news and updates of the BPO sector.

These are some of India's BPO'S in Chennai U|C or Completed




This is surely one of the few growth areas that is promising despite the ongoing recession. "Kenya go for it and give India a run for its money".

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thanks for the info and your contribution

[desert burner]

this thread will deal with information and development pertaining to telecommunication issues in kenya

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Kenya’s shift from analogue to digital television is set commence with the first transmission expected by the end of this month.

Kenya Broadcasting Corporation (KBC) has set the ball rolling by installing digital transmitters ahead of the testing period next month.

Launching the Digital Kenya campaign in Nairobi yesterday, Information PS Bitange Ndemo said the switch would allow more broadcasters to enter the market.

"Digital broadcasting will not only improve the quality of television signals but also create room for more broadcasters; allowing more content to be transmitted," said Mr Ndemo.

With digital technology one frequency, which currently relays one channel, will carry eight channels.

Eventually, broadcasters will no longer transmit their own content because this role would be taken up by a signal distributor.

Hence, the broadcasters’ main concern shall be generating content. This means content developers shall have immense opportunity to sell.

South Africa has already switched over and Kenya would be second in Africa to follow suit.

Kenya intends to stop analogue transmission by 2012 ahead of the June 17, 2015 deadline set by International Telecommunication Union for Africa, Europe, Asia, and Iran.

In the meantime, broadcasters will transmit both digital and analogue signals.

To receive digital signals, TV sets owners must buy set-top boxes to make their sets relevant in the digital arena. A more expensive option would be to buy digital sets, which have inbuilt digital turners.

Set top boxes are gadgets designed to convert digital signals to analog format. Some flat screen TVs that are a hit in the market must be installed with a set-top boxes.

Consumers are warned to be cautious when buying digital sets, lest unscrupulous dealers dupe them.

To avoid conflict of interest, KBC has formed a subsidiary company, Signet, to run multiplexing (distributing signals) services.

In an interview with The Standard, Mr Francis Wangusi, Communication Commission of Kenya (CCK) Director, Special Programmes and Broadcasting, said plans are underway to have Signet partner with private broadcasters for faster rollout.

He said the cheapest path for most Kenyan consumers now would be to buy the set-top boxes.

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Nairobi — UUNET Kenya has signed a multimillion video-conferencing deal with Japanese electronics giants, SONY, which will see the Kenyan firm provide end-to-end services.
Mr Martin Ngaira, UUNET research and development engineer, said SONY will supply the equipment that UUNET will resell. Besides, the local internet service provider will offer support services using its (UUNET's) Internet Protocol (IP) infrastructure.
To be able to use the facilities, Mr Ngaira said, their clients will have two options.


"They have the option of using the UUNET video-conference boardroom. For those of our clients who do not want to use our video conference boardroom, we will set up for them their video conference centres," he said.
Mr Ngaira said there will be an all in one video conferencing solution for low-end users, which will include a monitor, camera and software to run the video conference and data solution box.
Basically, this is a television connecting three to four people. It can be converted to a personal computer when not in use. "However, for the high-end, the components are the same, only that the client will buy a data solution box, camera and output device projectors," explained Mr Ngaira.

The high-end will have advantages including voice and motion tracking and covers a bigger boardroom.
Senior managers and trainers from SONY have been in the country to broker business deals and also to train 15 staff from UUNET who will be handling the business.


Apart from SONY, other leading manufacturers of video-conferencing equipment are Tandberg, Polycom, a US brand and Aethra from Italy. The three were using the SONY technology to manufacture video-conferencing equipment. However, the Japanese firm has decided to venture into the manufacturing of its own range of equipment, as opposed to providing the technology.
By partnering with SONY, UUNET has upped the competition in Kenya.
Besides, UUNET is able to provide video-conferencing on demand. This is usually applicable where clients request use of the service for a particular session, in which case UUNET will increase the bandwidth for that particular duration.
The bandwidth ranges from between 128 Kbps up to 2 mbps. The more the bandwidth, the better quality, resulting in the killing of still images.

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An automated trading system (ATS) for bonds will be ready by the end of the month, setting the stage for a possible surge in the average volume of bonds traded at the Nairobi Stock Exchange.

Consultants hired to install the system are testing it and are optimistic its on course for trading in a week, said the exchange chairman Eddy Njoroge, adding that it would open a new chapter of increased trading of bonds, compared to the current cumbersome manual processes and heavy paperwork.

Equities market
Foreign investors who have lately stepped up participation in the local bonds market — attracted by the relatively higher returns than those in home markets — are also expected to cash in on the new system, which promises more efficiency in trading and transparency since investors will have real time access to information on sales volumes and prices.

Trading in bonds went up by 127 per cent to Sh65.5 billion in the first half of the year, buoyed by investor “flight” from the equities market, which by contrast dropped by 64.7 per cent to Sh12.3 billion.

“We hope to trade both corporate and treasury bonds on the new platform,” said Mr Njoroge, who is also KenGen managing director, at an investors’ briefing last week.

Treasury is the biggest player in the Sh360 billion bonds market, out of which private corporations account for only about three per cent (Sh12 billion) of the outstanding offers that are expected to start trading on the new platform.

“CBK has been working jointly with the stock exchange and the Capital Markets Authority on this system,” said Central Bank’s director of monetary operations and debt management, Mr Jackson Kitili, adding that the government was ready to list all its bonds on the new system.

The bank acts as the issuing agent for government bonds.

About 73 treasury bonds and 11 corporate ones are listed at the NSE.

The process of automating transactions at the NSE started in 2004, with the first phase being launched in 2006 when trading of shares using the Central Depository System (CDS) accounts went live.

The rapid increase in average equity trade volumes at the stock market since then have been attributed to transactional efficiency credited to the new system and market players say the same is also likely to happen in the bonds market.

Settling a bond transaction currently takes an average of five trading days and is based on a manual transfer of ownership papers.

“It could even take two days to wrap up a bonds transaction after automation,” said Mr Victor Nkiiri, a fixed income dealer at Sterling Investment Bank, adding that automation is likely to demystify bonds trading for retail investors, who have always viewed it as a preserve of the elite.

Mr Nkiiri said small bonds that hardly ever trade in the secondary market due to their relative invisibility are now likely to trade more frequently.

The Sh15 billion KenGen infrastructure bond— which is currently at the issue stage — is the first to be sold to investors through CDS accounts similar to those used in trading of shares at the NSE.

This by implication is also likely to make it the first bond to be traded on the ATS platform, on November 9 when it is expected to be listed. Other treasury and corporate bonds that are currently traded using physical share certificates are expected to be “demobilised” and loaded onto the Central Depository and Settlement Corporation (CDSC) which will hold custody for all the bondholders.

Last month CBK launched over the counter (OTC) trading of treasury bonds through the inaugural one-year treasury bill.

The OTC market allowed direct trading of T Bills (which are currently not listed at the NSE) by commercial banks.

All bonds are by law only tradable through the NSE upon issue by government or companies in the primary market, but the CMA intends to amend the law to create a hybrid market that allows both stock exchange and OTC trading.

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Players in the banking industry are locked in a fierce battle for new customers, using technology to lure new account holders, industry trends indicate.
It now appears only banks that are able to reach that low-income retail customer, still cut off from the formal financial system, could emerge winners.
Signs of things to come can be seen in the way commercial banks are heavily spending on state-of-the-art mobile and Internet banking technology.
"We are already looking into the future by investing heavily in technology to enhance outreach to customers," said NIC Group Managing Director James Macharia.
But even with all the technological innovations, there is concern that a large segment of the population still lacks access to any form of financial services.
"Although the proportion of the unbanked population has been coming down, the pace is slow and we need to hasten it," Central Bank of Kenya Governor Prof Njuguna Ndung’u told an international policymakers forum in Nairobi last week.
The World Bank estimates that in Sub-Sahara Africa, only 20 per cent of households have bank accounts compared to 90 per cent in developed economies.
About 23 per cent of the population has access to banking services in Kenya compared to 50 per cent in South Africa and 51 per cent in Namibia.
In most Sub-Saharan countries, those accessing informal financial services are more than people with bank accounts.
Banking act
In order to rope in the unbanked, Treasury has proposed amendments to the Banking Act to introduce branchless banking.
"This will enable banks to provide their services through agents with wide distribution networks, legalising agent banking and reducing costs of financial services," said Ndung’u.
Using low cost wireless point-of-sale (POS) devices, thousands of shops, petrol stations, supermarkets and even post offices could become points of presence for banks.
"Agent banking offers an opportunity for banks to reduce the cost of opening a branch," Mr Frank Ireri Housing Finance managing director told Financial Journal.
He cites absence of geographical reach by most commercial banks, especially in the rural areas, for the large number of people operating outside the formal financial system.
Transaction accounts
"The cost of maintaining numerous transaction accounts has also discouraged most banks from reaching for the low-end of the market," said Ireri.
It has also been observed that the lack of financial literacy among low-income earners, especially farmers in the rural areas, has kept most of them out of the financial orbit. It is this unbanked population that commercial banks, savings and credit co-operative societies, deposit-taking microfinance companies and other providers are interested in.
But while more banks are offering Internet banking services, others are still reluctant to join the bandwagon.
"Online banking still has a long way to go," says Ireri.

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ECP invests Sh1.9bn in Kenyan ISP Wananchi

A Telkom Kenya employee arranges new mobile phones at an outlet in the capital Nairobi on September 17, 2008. Photo/REUTERS
By REUTERSPosted Tuesday, September 22 2009 at 17:44

U.S.based private equity group Emerging Capital Partners (ECP) said on Tuesday it had invested Sh1.87 billion in East African telecommunications and media firm Wananchi to expand its network infrastructure.



ECP, which has already invested heavily in Africa's fast-growing telecoms sector, said the upgrade would allow the firm to offer digital pay television, high-speed Internet and Internet telephony services.

Unquoted Wananchi is one of the region's larger Internet companies, offering retail and commercial web services in Kenya and Tanzania. It is thought to be lining up a stock market listing.

"Following on the tremendous growth in African mobile penetration over the last 10 years, we view broadband and related services as the next 'game changer' in African telecoms," ECP chief executive Tom Gibian said in a statement.

The capital injection should allow Wananchi to compete with bigger rivals such as Telkom Kenya, a unit of France Telecom, and Safaricom.


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Altech increases stake in Kenya's KDN

Mr Kai Wulff, CEO of Kenya Data Networks (KDN). Photo/FILE
By REUTERSPosted Tuesday, September 22 2009 at 12:02

South Africa's technology group Allied Technologies (Altech) said on Tuesday it would increase its economic stake in its East Africa unit, Kenya Data Networks (KDN), to 60.8 per cent from 51 per cent.

Altech, one of Africa's biggest connectivity providers, added that it would invest a further $39.5 million to build KDN's fibre optic network.

Altech, which expects 500 million rand cash flow by year-end, said it would invest a further $7.5 million in KDN to build a data centre in Nairobi, Kenya, with its co-shareholder in KDN, the Sameer Group.

The group said the data centre would offer disaster recovery, virtual application hosting, data and application backup, and an ethical hacking centre and data archiving facility to clients in the areas that will be connected by the planned undersea cables.

"KDN is central to our strategy and our gateway to East Africa. Our further investment in this business, is evidence of our confidence that the continent and in particular East Africa is poised for massive growth," Altech's CEO Craig Venter said.

Altech's East Africa operations made about 114 million rand and about 20 per cent of group earnings in the year to end February 2008.

Shares in Altech were 1.55 per cent lower at 63.05 rand by 0808 GMT, lagging a firmer JSE All-share index.


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