Kenya: Country Among Top States With Robust Telecoms Secto

[business daily] Innovation and increasing investment in telecoms has raised consumer access to services and pushed Kenya to recognition as one of the world's most creative users of the mobile phone.

The country joins Uganda and Tanzania atop the list of African countries that have highly competitive mobile phone sectors which have led to increased gains for consumers and their economies.

"Each of these three markets has been a laboratory for competition. The number of operators has led to increased investment and in all three countries, this competition has benefited African consumers as the cost of owning and using a mobile phone has fallen," says a new report, titled African Telecoms and Internet Markets by regional research house Balancing Act.

Each of the three countries have over 10 million mobile subscribers -- the biggest numbers regionally -- who have benefited from reduced calling charges and exposure to unique products such mobile money transfer solutions which are becoming the grease that the economies shall look to for future growth.

In particular, Kenya's increasing reliance on telecommunications has translated to larger economic gains for the country.

The sector currently contributes 2.8 per cent of the country's Gross Domestic Product (GDP) and analysts expect that contribution to rise to 15 per cent in the next three years on the back of increased tax revenues from mobile operators and the sector's direct and indirect contribution to the economy.

Telecommunications has become a key employer of Kenyans, with 50,000 working directly within the sector and nearly 700,000 involved in related businesses.

"It is now widely accepted that the communications sector will create a more economically viable Kenya. The sector has the potential to contribute upto 50 per cent of the country's GDP," said Dr Bitange Ndemo, Information Permanent Secretary.

Safaricom still maintains the lion's share of the market, with 78 per cent of all mobile users on its network, while Zain commands over 18 per cent.

Telkom Kenya and Essar share the remaining percentage.

Meanwhile, the report points to last year's mobile price war instigated by rising competition for mobile voice customers as the cause of a significant decrease in calling charges that spurred increased consumer spending and investment by mobile players.

Between the third quarter of 2007 and the end of 2008, calls to other subscribers on the same network fell by over half, from Sh18.10 to Sh8.98.

Renewed focus on data or internet services has led more players to angle their products to include data services, a move that Balancing Act believes will inspire further growth in the sector.

"The mainland East African countries currently connected by satellite will see a large increase in international bandwidth used as prices drop from around $5,000 per megabyte per second to something close to $500 on the new fibre connections.

This cheaper bandwidth price should lead to cheaper Internet prices for consumers," said Balancing Act.

The emergence of a unified licensing framework that allows industry players to offer a variety of communications services has led to the growth of the internet sector.

Each country now has several hundred thousand subscribers who access the Internet using their mobile phone.

Country Among Top States With Robust Telecoms Sector