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Kenya Telecommunications Report Q4 2011
Business Monitor International, Aug 2011, Pages: 85
Business Monitor International's Kenya Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kenya's telecommunications industry.
BMI's update to the Kenya Telecommunications market report for this quarter incorporates latest regulatory data and operational figures published by some of the major telecoms service providers in the market. It also includes forecast for the mobile, fixed-line and internet markets as well as analysis of recent developments in Kenya's telecoms sector.
The latest regulatory data on the Kenyan mobile market relates to the end of December 2010, while mobile operators Safaricom and Orange published operational data for March 2011 and June 2011 respectively. Considering the disparity between the regulator's estimates for Orange Kenya and that of parent company France Télécom, BMI's figures for Kenya's mobile subscriber base differs from that of the regulator. BMI uses France Télécom's data for Orange Kenya because of the continuous discounting of inactive lines on the operator's network. However, it continues to rely on the regulator's estimates for second-ranked Airtel and Yu, which do not publish market data for their operations. Based on a combination of regulatory and operator data, BMI calculates there were 23.891mn mobile subscribers in Kenya at the end of December 2010. This represented a penetration rate of 58.4%, up from 48.6% at the end of 2009. BMI estimates the market grew by 2.3% during Q111 to reach 24.440mn subscribers. BMI expects high growth rates to continue in 2011 and 2012 before slowing in the latter part of BMI's forecast period as the market approaches saturation. Regulatory factors, including SIM registration, mobile number portability and low interconnection rates, are expected to reduce the incidence of multiple SIM ownership and, consequently reduce growth rates in the medium term. BMI now envisages total mobile subscriptions to be just less than 39mn by 2015, reflecting a penetration rate of about 83.6
There could be respite for mobile operators following the government's intervention to suspend further cuts to interconnection rates because of the impact of lower tariffs on operators' margins. In May 2011 President Mwai Kibaki suspended the latest round of cuts to interconnection rates due to start by July 2011. It is uncertain if the suspension of interconnection rates is permanent or whether the regulator can resume cuts in the future. However, it is a relief for operators facing intense downward pressure on ARPU rates. The latest regulatory data from the CCK show fixed-line subscriptions edged higher during Q411 after a sharp drop during the first nine months of 2010. By the end of December 2010, total fixed-line subscriptions were 380,748, up by 2.9% q-o-q. However, BMI is not convinced the market is set for sustained growth considering market data for H111 released by Telkom Kenya, which showed fluctuations in fixed-line subscriptions during the H111. The fluctuation in fixed-line subscriptions in Kenya makes it difficult to forecast the sector's growth trajectory over the next five years, especially as there is no clear explanation for the sharp decline in subscriber numbers after a period of impressive growth. However, the market is expected to continue in a general downtrend, albeit it at a slower rate than previously forecast.
According to the regular, there were 10.2mn internet users in Kenya at the end of 2010, significantly up from just 3.9mn a year earlier. Mobile internet access through 2.5G and 3G networks is the main driver of internet penetration in Kenya. Meanwhile, competition in the 3G market following the launch of commercial services by Airtel and Orange is set to boost broadband penetration in Kenya.
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