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Kenya: Telkom Goes for GSM in Battle for Airwaves
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Business Daily (Nairobi)
7 May 2008
Posted to the web 7 May 2008
Michael Omondi
Mobile phone titan Ericsson has received a Sh8.9 billion GSM network order from Telkom Kenya, setting the stage for a bruising battle for control of the local mobile phone market.
The loss making Telkom Kenya is betting on the mobile phone market to push into the profit zone in a move that places the firm in a head-to-head battle with Safaricom, Celtel and Econet Wireless.
Econet is planning to roll out its long awaited network in July, while Telkom Kenya intends to set up its network in September.
The Ericsson deal marks the first major announcement by the firm after a Sh26 billion buyout by France Telecom - giving them a 51 per cent stake in the State owned firm - to win control of the firm's board and management.
"The agreement with Ericsson reflects a strong commitment by Telkom Kenya to deliver enhanced communication experiences to customers" said Dominic Saint- Jean, the new CEO of Telkom Kenya.
Mr Saint- Jean previously told Business Daily that the firm would focus its activities on the urban areas before spreading to the country side.
But experts are warning that time is not on Mr. Saint-Jean's side as his competitors race to maintain and grow their share of the lucrative telecoms market.
"Telkom Kenya has to move with speed since the rest of the market is watching them and currently sealing its entry point to the market," says Vincent Mutavi, the country manager of Psitek, a regional telecommunication firm.
Mr Mutavi added that Telkom Kenya risks loosing a huge chunk of its target market to the rest of the players, notably Econet.
However, Mr Saint-Jean remained optimistic of cracking the market, adding that Telkom Kenya with the French giant on board has done their homework well.
"Being late is relative, we are going to give Kenyans what they have been lacking," he said without giving details lest competitors pick them up.
Besides the mobile phone subsector, the French giant is also gearing up to offer "quadruple play"; bundles of fixed telephony, mobile telephony, internet broadband and television services.
Globally, telecommunication operators are starting to integrate their fixed, internet and mobile networks by offering special deals to customers who buy all the services together.
"We have an edge over other players since we are the only telecommunication supermarket in the region," he said, while refereeing to Telkom's fixed telephony, wireless telephony, mobile telephony and internet divisions.
But it will not be child's play for Telkom Kenya, a number of telecoms analysts say, including Safaricom CEO Michael Joseph.
"We are ready for them and of course will not make it easy for them," said Mr. Joseph in an earlier interview.
He stressed that Safaricom is set to cement its dominant position in the market place sendt a clear signal that a vicious battle between the markets' top three players is set to unfold in the last quarter of the year.
Already, Safaricom's stranglehold of the mobile phone market with its 9.2 million subscribers has eaten deep into Telkom's voice revenues and boxed Celtel Kenya into a perennial money losing venture
This has turned it into the most profitable company in East and Central Africa, with net profits of Sh12 billion in 2007.
Celtel, on the other hand, has failed to match the might of Safaricom as it reported a loss of Sh1.5 billion is the same year.
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But the Kuwaiti owned firm cannot be counted out yet.
It has inaugurated an ambitious network upgrade plan that will push it's population coverage from 86 per cent in 2007 to 95 per cent this year as it seeks to net the uncovered virgin market.
New entrant, Econet Wireless, which is partly owned by India's Essar, is also set to rollout its mobile services by July, in time to meet the deadline set by the Communication Commission of Kenya.
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