East Africa Com report: Telkom Kenya positions as only convergence player in a competitive mobile market

TELKOM KENYA: ambitions of being East Africa's only quad-player

Last week I spent two days nipping in and out of the Com World Series East Africa Com conference and exhibition, organised by Informa Telecoms & Media in Nairobi, Kenya. I had hoped to share some of what was discussed here in real-time, blogging merrily away from the conference venue. A busy schedule made this difficult, compounded by the non-availability of a genuinely fast and reliable Internet connection at either the venue or my hotel.

Broadband speed and price in the region was a topic visited by a number of the conference speakers. Peter Reinartz, the Deputy CEO of Telkom Kenya/Orange Kenya, for instance, spoke about the effects of the long-anticipated arrival of submarine fibre optic cable. Reinartz poured cold water on suggestions that the retail price of broadband services would fall by as much as 90%, but did pick out the region's improved connections to the rest of the world as being a key driver of the kind of converged offerings his company is putting together.

Telkom Kenya was privatised in 2007, with France Telecom acquiring a 51% stake. The Kenya Government retains the other 49%. As part of the process, the company's controlling stake in market-leading cellco Safaricom was transferred to the Government, temporarily taking Telkom Kenya out of the GSM game. This brief period away from the heat of the battle in the mobile space ended with the September 2008 launch of Orange Kenya. With the later arrival of Essar-managed Econet Wireless Kenya (branded Yu), the country's mobile market is now home to four competing providers: Zain also has a presence.

As of March 2009, according to the World Cellular Information Service, the Kenyan mobile market is split as follows:

1. Safaricom: 76.79%
2. Zain Kenya: 17.41%
3. Telkom Kenya/Orange: 3.90%
4. Yu: 1.89%

The fourth player in the list above has recently been the subject of takeover speculation. On the day the conference opened, South African news portal Business Report was carrying denials from Yu CEO Srinivasa Iyengar regarding plans to sell the operation to MTN. If such a transaction were ever to take place, the Kenyan market would become the scene of a competitive struggle between only well-funded regional giants.

In his presentation, Reinartz spoke about not wanting to be Kenya's "third mobile operator", preferring to position the company as the country's only converged operator. 2009, he said, is to be a crucial year in the development of this strategy. Having launched a unified brand, a single touchpoint for customers and having "built an image as a full alternative to [the] mobile incumbents" in 2008, Reinartz set out his stall for this year: reinforcing existing customer retention initiatives and rolling out the first layer of convergent propositions. One of these is voice pricing unification across Telkom PSTN, Orange 'Fixed Plus' (CDMA WLL) and Orange mobile services. Customers can enjoy friends-and-family discounts across all these services.

At the conference, Zain was represented by Raed Haddadin, the group's Commercial Director for East Africa. A theme about which Mr. Haddadin spoke enthusiastically was mobile money. In this space, the Zain offering, branded Zap, enables under-banked people to desposit and withdraw cash, transfer funds to family and friends, top up mobile airtime and pay bills for goods and services.

Other tasks prevent me from rambling on at length now about other information I gleaned at the conference. I'll try to share more in the coming days.

East Africa Com report: Telkom Kenya positions as only convergence player in a competitive mobile market