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Kenyan telecoms market remains dynamic as operators jostle for their share

Although the Kenyan telecommunications market appears to remain stagnant between 2012 and 2017 in US dollar terms, it will actually grow steadily in local currency terms as operators jostle for market share, according to a new report from Pyramid Research.

The report, obtained by PANA Wednesday, describes Kenya’s telecommunications market as one of the most dynamic in sub-Saharan Africa.

With the successful mobile money applications and the deployment of Long Term Evolution (LTE) in 2013, Kenya is a critical regional market for investors, operators and vendors, said Pyramid Research.

LTE, which is marketed as 4G LTE, is a standard for wireless communication of high-speed data for mobile phones and data terminals.

The report, ‘Kenya: Operators Prepare for LTE while Mobile Data Drives 3G Expansion’, offers a profile of the country’s telecommunications, media and technology sectors based on proprietary data from Pyramid’s research in the market.

In addition, it provides a detailed competitive analysis of both the fixed and mobile sectors, tracks the market shares of technologies and services and monitors the introduction and spread of new technologies.

“The market will remain a mobile operator’s market, as the segment’s revenue is expected to be KSh186bn (US$1.6bn) and govern the market with a staggering 96 percent share by 2017,” said Pyramid Research associate analyst Jessica Gendall. “Mobile services will dominate as the basis of competition for operators and remain a central aspect of lifestyle in urban and rural Kenya.”

Mobile money has become a stable and sizable share of revenue for Safaricom, while Airtel and Orange are trying to catch up with Safaricom, the provider of M-Pesa, by lowering their mobile money service tariffs.

“Similarly, the arrival of mobile broadband on multiple 3G networks and possibly also on a shared LTE network in the near future should translate to a squeezing of the revenue share generated in the fixed segment,” Gendall noted.

The market generated KSh146bn (US$1.7bn) in local currency in 2012 and it is expected to follow an upward trend at a CAGR (compound annual growth rate) of 6 percent in local currency to KSh194bn (US$1.7bn) in 2017.

Mobile voice continued to hold the biggest market share in 2012, dominating 63 percent of the market with revenue of US$1.1bn.

Price wars have been a recent trademark of the Kenyan mobile voice segment, and it may happen yet again following further interconnection rate cuts in late 2012.

According to Pyramid Research, this will push the operators to prioritize their mobile data services, “which we project to see the biggest growth between 2012-2017 at a CAGR in local currency of 11 percent and constituting a 39 percent share of the entire telecom market revenue by 2017.”

The forecast showed the biggest decline would come from dial-up Internet revenue, recording revenue of US$1m in 2012 and would be largely phased out by 2017.


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