20100602
Africa Good News

Kenya's second largest mobile operator Zain plans to roll out a third-generation (3G) service in July this year after an expected cut in license fees by the regulator, its managing director said this week.

Data is the main growth area for operators in east Africa's largest economy and Kuwait-listed Zain, which along with Essar's Yu and Telkom Kenya have a combined market share of just over 20 percent, have been pushing for lower license costs to allow them to launch 3G.

"We are planning to roll out 3G services in July 2010. We expect the regulator to announce new spectrum costs for 3G during the first week of June which are going to be substantially lower than the current $25 million," Rene Meza told Reuters by phone.

"That will obviously allow all mobile operators to be able to roll out 3G services in Kenya and increase Internet penetration in the country."

A senior government official said in February license fees for 3G telecom services could be cut for smaller mobile phone operators to help them compete better.

Kenya has a 50 percent mobile phone penetration rate but the number of people with access to broadband Internet is much lower.

The International Telecoms Union says only 8 percent of Africans have access to the Internet with only 3 percent having access to broadband.

Safaricom, Kenya's leading operator with a 78.3 percent mobile market share, has benefited from its early acquisition of a 3G license, posting a 72 percent growth in revenue from the data segment in its year ended March.

Meza said Zain Kenya posted a 35 percent growth in its data business last year - through 2G - but said it was hard to predict performance this year since the environment was fluid.

"There are so many variables and aspects that one has to consider. Two years ago we were two mobile operators in the market, now we are four. Regulations will change," he said.

A rise in the number of operators in the Kenyan market has also affected the firm's subscriber base, Meza said, adding Zain Kenya had 2 million users, which compares with the 2.68 million the company said it had at the beginning of last year.

"Entrance of new players in the market, coupled with the global crisis and the post-election violence affected the mobile uptake of subscribers in Kenya's industry," he said.

Zain Kenya, like other Zain operations in Africa, is in the process of being sold to India's Bharti Airtel in a $9 billion deal.

"Hopefully the transaction will be closed soon and we are going to have clearer visibility on the way forward in Africa," Meza said.