In a statement, Africell said, “In Uganda – a country with a mature and competitive telecom sector – we believe that the opportunity to achieve this impact is increasingly limited. We have therefore taken the difficult decision to permanently end Africell Ug’s operations in Uganda.”

The company said its services will stop on October 7, 2021. The London-headquartered telco failed to expand in the country against MTN, which is over 10 million subscribers in the country. Africell had 2.3 million subscribers in Uganda.

In an internal memo to staff that was leaked, Africell said, “After careful consideration, Africell group has decided to leave Uganda and focus on other opportunities for social and commercial impact. Doing so is the most sustainable way to fulfil our overall mission to advance the African telecom sector. Although Africell regrets the immediate impact this decision will have, we believe it is a justified long-term transition and we are closely supporting affected employees and customers.”

Operating in Africa since 2001, Africell now has more than 12 million subscribers in Gambia, Sierra Leone, the Democratic Republic of Congo and Uganda. The telco is planning to launch its services in Angola by the end of this year.

The post Tough competition sees Africell exit Ugandan telecom market appeared first on International Finance.

Airtel’s revenue after tax dipped by 4.4 percent to $408 million. The telecom operator said in a statement, “All countries, with the exception of Rwanda, delivered double-digit revenue growth.”

Its performance during the period between January and March was boosted by factors such as a voice and data customers in Kenya, Tanzania and Uganda. It is reported that Airtel’s voice revenue in East Africa rose 6.2 percent to $606 million. This revenue was mainly driven by a 13.5 percent increase in customers and 15.8 percent in usage per customer.

Airtel’s Africa CEO Raghunath Mandava, told the media, “We enter this period of increased volatility in a strong financial position and our view on the medium-term opportunities across our footprint has not changed. These markets will continue to benefit from strong population growth and the need for increased connectivity and financial inclusion.”

Airtel’s data revenue grew by 20.3 percent to Sh32.8 billion. This revenue was driven by 22 percent growth in data customers and a 4.6 percent rise in data average return per unit, media reports said.

The post Airtel Kenya sees 9% rise in growth impacted by currency devaluation appeared first on International Finance.

The EACC is probing for any irregularities related to the sale of Telkom’s shares to France Telkom. The anti-corruption agency issued a warning that it would hold the companies accountable if they proceed with the merger without getting clearance from the agency.

According to EACC Director of Legal Services David Too, both the Treasury and the Communications Authority (CA) have been asked not to approve the deal yet.

David Too told the local media, “We have not approved any merger and we have issued advisories to responsible government entities, including the National Treasury, to protect the interests of Kenyans in the approval process.”

A decision to investigate Telkom’s share sale to France Telkom was taken in 2014 by the Public Investment Committee (PIC). The committee approached the EACC in this regard and asked them to carry out a thorough investigation.

Earlier, the local media reported the EACC has given its approval for the merger between Airtel Kenya and Telkom.

The merger was proposed to take on Safaricom, which dominates Kenya’s telecom market with a 65 percent market share. As things stand, the merger will be further delayed as the EACC would give a clearance only after the investigation and the committee does not find any fraudulent practices.

It was also speculated that Safaricom, which sees the merger between Telkom and Airtel Kenya as a threat, is opposing the merger. However, last month, Safaricom Interim CEO Michael Joseph revealed that the company does not oppose the move but wants the issue of frequency allocation to be re-balanced.

The post Kenya’s EACC is yet to clear Telkom-Airtel merger appeared first on International Finance.

The bill is in its first reading in the National Assembly. Once approved, it will force the telecom companies in Kenya such as Safaricom, Airtel, and Telkom Kenya to form separate management for its subsidiaries. The companies will also require to maintain separate accounts.

According to MP Elisha Odhiambo, the new bill would provide for a regulatory framework for such businesses by proving a reporting provision to the Communications Authority (CA) on compliance.

He told the media that, “It gives provisions for penalties for non-compliance. It will aid in the control of anti-competitive practices by the larger industries in the sector.”

According to the Kenya Information and Communications (Amendment) Bill 2019, the companies will need to apply for fresh licences from the respective regulators after the split. This is in addition to operating a telecommunication system or providing services as may be specified in the licence granted under Section 25 of the Kenya Information and Communication Act.

Last month, the proposed merger between telecom operator Airtel and Telkom Kenya was suspended by Kenya’s Ethics and Anti-Corruption Commission. The merger, which was announced in February, was also criticised by the National Assembly. According to the assembly, the merger deal had all the hallmarks of a scandal as it was allowing a public company to be acquired by private interests.

If the Kenya Information and Communications (Amendment) Bill 2019 gets approved, it will mean both Airtel and Telkom Kenya will have to split their subsidiaries.

The post New Kenyan law to separate telco’s mobile money business appeared first on International Finance.

It is noteworthy that despite losing thousands of internet subscribers, MTN still continues to dominate the industry with a 42 percent market share. Airtel, meanwhile remains second after MTN with an estimated 32.7 million subscribers and a market share of 27 percent.

While MTN lost a record 667, 245 internet subscribers in August alone, interestingly, Airtel gained 350,134 internet subscribers in the same month, making it the only internet service provider in Nigeria that recorded positive growth, alongside Visafone with 83,482 internet subscribers.

According to reports, MTN also lost around 178,103 internet subscribers in June.

The report by the NCC conducted the study taking into account five major internet service providers -MTN, Airtel, 9mobile, Globacom, and Visafone.

While the sudden drop in internet subscribers may be caused by poor connectivity; many argue that the recent xenophobic attacks in South Africa may also have had an impact. According to reports, Nigeria’s internet download speed is among the slowest in the world.

Earlier this year, MTN Nigeria launched MoMo agent, its mobile money platform. Through MoMo agent, MTN Nigeria aims to provide financial services to unbanked Nigerians. MTN planned to rollout about 500,000 MoMo agents across Nigeria, however, not much has happened so far on the ground level.

The post MTN Nigeria loses thousands of subscribers as Airtel gains appeared first on International Finance.

Ian Ferrao will take the role of Regional Director of Airtel’s East Africa business. He will oversee Airtel’s operations in East African countries such as Kenya, Uganda, Tanzania, and Rwanda. He will also be a part of the Africa Executive Committee based in Nairobi.

Airtel Africa CEO Raghunath Mandava told the media that, “He brings a wealth of relevant telecommunications and mobile money experience within the region and will be an asset to the business. He will be part of the Africa executive committee based in Nairobi and will focus on driving growth across voice, data and mobile money in East Africa.”

Ian Ferrao has 12 years of experience in senior management in Africa’s telecommunication industry. Prior to joining Airtel, he held the role of Chief Executive Officer (CEO) at Vodacom Tanzania. He also held the role of CEO at Vodacom Lesotho and chief commercial officer at Vodacom Business Africa.

He also holds a BSc Management Sciences degree from the Warwick Business School, UK.

Last month, Airtel Africa announced that it has provided its services to more than 100 million customers in Africa. The telecom operator entered the African telecom market in 2010 through the acquisition of Kuwait-based Zain’s Africa operations for around $10.7 billion.

The company also posted revenue of $795.9 million in the second quarter of 2019. Currently, the company operates in 14 African countries which are Nigeria, Niger, Gabon, Chad, Congo Brazzaville, the Democratic Republic of the Congo, Madagascar, Seychelles and Kenya, Uganda, Rwanda, Tanzania, Malawi, Zambia, in East Africa.

The post Airtel East Africa head to grow data, mobile money revenue appeared first on International Finance.

The company’s shares hit a low of 67 pence against its IPO of 80 pence per share. 

Airtel Africa had set a price range between 80 and 100 pence per share in the week before its public offering. According to Business Daily, the final offer included 744 new shares, with a deal worth £595 million and the initial market capitalisation at approximately £3.1 billion at issue. 

However, the market capitalisation of the company would have been around $3.9 billion on the basis of its offer price. 

Chairman of Airtel Africa Sunil Bharti Mittal, said, “The strong support we have received from institutional investors demonstrates the attractive investment proposition Airtel Africa offers the market. Since first investing in Africa almost nine years ago, we have leveraged our expertise in emerging markets to deliver on a clearly defined strategy to build Airtel Africa into a market-leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money.”

Airtel Africa operates in 14 African countries and will list on the Nigerian and London Stock Exchanges. 

The company’s local subsidiary Airtel Kenya is expected to merge with Telkom Kenya after a binding agreement is signed. Under the terms of the agreement both companies will merge their mobile, enterprise, and carrier services to form a new joint venture. The new joint venture will be called Airtel-Telkom.  

Telkom Chief Executive Mugo Kibati will be appointed Chairman and Airtel Kenya Chief Executive Prasanta Sarma will be the CEO of Airtel-Telkom.

The post Airtel Africa shares drop 15% after LSE debut to 67 pence appeared first on International Finance.

Amoxers Wachira

October 6, 2014: Over the last few months , Kenya’s telecom sector has been buzzing with activity. From mobile network operators  taking their price wars to court, to cut throat competition, which has prompted some operators to fold up, to a protracted battle opposing the entry of mobile virtual network operators (MVNOs) into the telecom space, it is a scene that experts believe signals the coming of age of the industry.

In March this year, Safaricom, Kenya’s largest mobile network operator by market share, teamed up with Airtel Kenya to split the assets of yuMobile, as the Essar-owned telecom prepares to exit the Kenyan market in the face of losses.

Essar, which operates under the yuMobile brand, launched operations in 2008 and has 2.55 million subscribers. Its exit leaves Kenya with only three telecoms operators — Safaricom, Airtel and Telkom’s Kenya Orange.

In the resulting deal, Safaricom, famed for its trail blazing money transfer service M-Pesa, will take over yuMobile’s infrastructure. On the other hand, Airtel will absorb former yuMobile customers to add to its market share and solidify its place as the second largest telecom company in the country with its subscribers rising to 8.2 million, up from 5.5 million.

The last few months have also seen speculation rise over a possible exit of yet another telco, Orange Telkom, which is said to be on an exodus from unprofitable markets in Africa. This trend has raised questions about the viability of the Kenyan market to foreign investors.

In a February 2014, in a report named ‘The outlook of Africa’s telecom market’, audit firm Deloitte noted that consolidation is set to become commonplace in Africa as the continent follows a growth pattern established in the developed world.

“As competition intensifies and growth slows down in Africa, consolidation efforts begin to drive merger and acquisition transactions as smaller players exit,” said Deloitte.

Competition in the telecommunication sector has been common in this sector the world over. But the recent entry into this space by mobile virtual network operators (MVNOs) is perhaps what has rattled the Kenyan market most.

Earlier this week, industry regulator Communication Authority (CA) gave Equity bank, the largest bank in the country by number of accounts, the green light to operate thin SIM technology for one year following investigations that the thin SIM does not pose any threat to the user. The move, which ended months of speculation and anxiety over whether MVNOs will be given a chance in the country, has faced massive opposition from mobile network operators like Safaricom.

Equity bank successfully sought an MVNO license in March through its subsidiary Finserve Africa. It intends to ride the MVNO on Airtel Kenya’s infrastructure.

While making the announcement, CA said it will only allow one firm, Taiwan-based SIM manufacturer Taisys Technologies, to supply the SIMs during the one-year period.

“The authority will allow the use of thin SIM technology under strict observation for a period of one year. During this period, only Taisys thin SIM will operate in the Kenyan market,” CA chairman Ngene Gituku said during a press conference.

The SIM in contention is paper-thin and is embedded with a chip. Users overlay it on their primary SIM card regardless of the network, and can subsequently receive services from two mobile service providers simultaneously.

“It would compromise the security of the M-Pesa system and consequently expose our 19 million M-Pesa subscribers to irreparable harm,” said Safaricom chief executive Bob Collymore after the bank was granted a licence.

However, the regulator maintains that the thin SIM complies with all minimum mandatory international standards and that no major complaint, especially on interception of traffic of the primary SIM card, has been reported so far.

“Tests conducted on Taisys thin SIM by China National Computer Quality Supervising Test Centre as well as the Bank Card Test Centre of China shows that this particular thin SIM complies with applicable ISO and ETSI standards,” the chairman said.

After successfully surmounting that hurdle, the next task for the bank would be to seek a licence from another regulator, Central Bank of Kenya, if it intends to offer money transfer services.

But it appears the bank is not yet out of the woods. CA warned that if any vulnerability is discovered from the use of Taisy’s thin SIM card, operations of the thin SIM will be stopped in the Kenyan market pending final recommendations of the security report.

Apart from Equity Bank, three other firms have applied for MVNO licences. These are ZionCell Kenya Limited, Mobile Pay Limited and national carrier Kenya Airways, which will also be hosted by Airtel Kenya.

Of the three licensed MVNOs, it’s Finserve which has expressed interest in carrying out mobile money transfer services by utilising the thin SIM (or overlay SIM) technology, a move that was immediately contested by Safaricom claiming that this can interrupt and intercept communication in the primary SIM card. Safaricom further claimed that dual use of the overlay SIM may introduce vulnerabilities in the network and also infringe on intellectual property rights.

However, while making the announcement, the CA chair stated that “this complaint was considered by the Authority in coordination with the CBK, as the regulator of mobile money transfer services.”

“The two regulators engaged both Safaricom and Finserve for separate hearings on this matter. The regulators also sought representations from Taisys SIMoME as well as GSMA. The Authority also benchmarked with various standards organisations and regulators, who supported the intended use of the technology in Kenya,” stated Gituku.

“For you to engage in mobile phone financial services, you have to follow the National Payments and Settlement Systems Act 2012 and also the National Payments and Settlement Guidelines of 2014,” CBK Governor Njuguna Ndung’u said.

Equity MVNO intends to link all its banking services to the mobile phone accounts, where customers can apply for loans, move money to and from their bank accounts, pay bills as well as carry out trans-border transactions from their mobile phone.

Will competition make or break the industry, especially now that nontraditional telecoms are coming into the scene? “The operators will probably not compete on voice pricing but will try to get a niche market, meaning they might offer lower tariffs than incumbent mobile network operators (MNOs),” says Nairobi based ICT expert Muriuki Mureithi who is a lead consultant at Summit Strategies Kenya.

“We are not competing with telcos, the space is too big,” Equity Bank Group chief executive officer Dr. James Mwangi told investors on the progress of the roll out of the MVNO in Nairobi on May 26.

Mwangi said that Airtel had opened up 60 per cent of its excess capacity to facilitate the bank’s telecom wing. The bank said that it would issue its 8.7 million customers with SIM cards in a move that is largely viewed as eyeing a piece of the fast-growing cell phone-based financial services, including Safaricom’s M-Pesa, which will give them access to mobile banking and other telecommunication services.

Safaricom’s M-Pesa money transfer service is the biggest mobile banking service in the country, and earned the company revenue of Sh26 billion last year.

The entry of Equity Bank is seen as a game changer in the industry. With the bank having already announced rock bottom money transfer fees and cheap instant loans, the sector is set to open up to even more competition.

Mobile money transfer fees will be charged at one per cent the value of a transaction and capped at Sh25.

“If you send Sh100, you will pay Sh1. If you send Sh1, 000, you will pay a maximum of Sh25,” said Equity Bank’s James Mwangi.

Instant loans will also be extended to customers at a maximum rate of two per cent a month, he said

The bank said it plans to initially convert its nine million customers before marketing the product to new customers, by issuing them with new SIM cards for the MVNO that can operate alongside conventional SIMs.

As the regulator has previously indicated that the local market cannot support many operators, the entry by MVNOs is seen as a welcome move. In 2012, CA director general Francis Wangusi said the country would not license a Vietnamese mobile operator for fear it would reduce profitability of existing players.

Is MVNO technology the better option for consumers?

Even before the dust has settled, a parliamentary committee has stopped the use of Equity’s thin SIM for money transfer until experts can verify that the system cannot be tampered with.

Kenya’s National Assembly Committee on Energy, Information and Communications said it would appoint a team to work with experts to ascertain the safety of the system.

For consumers, a rise in the number of mobile network operators in the market will increase their options and perhaps lower tariffs.

According to Mr. Muriuki Mureithi, MVNOs can complicate the situation in the market, though they can exist without destroying the MNO market.

Despite these intrigues in the Kenyan market, analysts from America’s NBT Equities research firm say that overlay SIM cards have been operational in over 50 countries globally, and might rise to more than 200 in the near future.

The local market is yet to cross into maturity, given the low penetration of broadband. However, a recent development in undersea data connectivity has boosted internet penetration in the country. Kenya’s telecom market has had great potential as both fixed and mobile markets remain partly untapped.

The year 2004 saw significant changes in the country’s telecom industry, with the incumbent operator Telkom Kenya losing its monopoly in the fixed-line and internationals bandwidth sectors to newcomer Safaricom. Licenses were also issued to a third mobile operator, Celtel (which later changed to Zain, then Bharti Airtel) and several new data carriers, thereby marking a significant change in the competitive landscape for telecom services across the country.

The last few years have seen rapid growth due to new players entering the market, the introduction of 3G services by the telecom operators and, recently, duty being waived on new mobile handsets and the allowance of number portability.

The number of operators providing mobile services in Kenya has now increased to four and with improving mobile infrastructure there is coverage in all major towns in the country.

Safaricom still dominate the market with a market share of 79% and the number of subscribers has risen significantly over the years. Safaricom currently believe that they are being targeted by new competition rules, which were introduced by regulators to safeguard against abuse of their market dominance.

The other market players welcome the rules as an attempt to monitor market segments where there is a monopolistic situation and no form of price control, especially around money transfer.

Safaricom was the first operator to launch GSM-based mobile service in Kenya in 1999. It has more recently launched voice SMS, mobile advertising and missed call alert. The majority of its shares are owned by Vodafone Kenya. In 2008, it introduced 3G services. 3G enabled handsets help users in connecting to a range of services such as internet access, e-mail communication and access to calendars and other multimedia services.

The Fair Competition and Equality of Treatment regulations, part of the Kenya Communications Regulations of 2010, require dominant players in the industry to report to the regulator before revising pricing. This has seen mixed reactions from operators, in particular Safaricom, which has termed the rules unfair, but other operators feel the regulations would oversee further growth in the sector.

Kenya’s mobile market experienced rapid growth throughout the last decade and is forecast to grow even further over the next five years through the expansion in its mobile data services, especially around mobile banking.

By the end of 2014, the total number of mobile subscribers is predicted to rise from the current 24.6 million to 33.2 million, achieving a penetration rate of 79 percent.

With the entrance of new players in the form of MVNOs, the telecommunication landscape in Kenya is set for a major shakeup. Even as industry players and regulators grapple with issues around the thin SIM, the end user still contends with high calling rates.

Additional reporting by Veronicah Riba

The post Kenya rings in competition appeared first on International Finance.