22 December 2015

Kenya: Stiff Competition, Price Falls Expected As Kenya Power Enters Internet Service Provision

Kenya Power is targeting homes with a shift to fibre optic business, a move that is likely to result into stiff competition in internet service provision and possibly trigger a fall in prices.

The company's shareholders on Tuesday approved the formation of Kenya Power International Limited, created out of the former Kenya Power training school that will operate as the investments arm of the utility.

The first task of the wholly owned subsidiary will be to connect homes to internet, riding on the company's existing fibre optic cable lines network and customer base.

It will also spearhead transformation of the training school into a fully-fledged university that will be tasked with research on energy matters.

All power distribution lines are currently fitted with fibre optic cables that aid communication within the electricity network. Kenya Power has been leasing the extra capacity to telecommunication companies.

"We already have the necessary infrastructure in terms of the network and given that we already have 4.2 million customers, giving this extra service to their homes will be a very little expenditure," said the company's Managing Director Ben Chumo.

In the year ending June 30, Kenya Power earned Sh259 million from leasing its fibre optic, representing a 3.6 per cent jump in income earned from the same business during the previous year.

Kenya Power is entering the telecommunications business when uptake of the fibre optic is on the increase, signalling good income for the company that is aiming to raise extra revenue to finance its operations.

Data from the Communications Authority of Kenya for the fourth quarter to June indicates that growth in fibre optic subscriptions remained steady over the period, registering 93,598 subscriptions, up from 87,838 recorded during the previous quarter.

In relation to the same period of the previous year, 34.9 per cent growth in subscriptions was attained.

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