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Kenya's Safaricom to build fibre network

19 April 2012, 17:03

Nairobi - Kenya's top telecoms operator Safaricom will lay a fibre-optic cable network to offer faster and more efficient internet data services in expectation of a mobile "data tsunami", its chief executive said.

Safaricom, in which Britain's Vodafone has a 40% stake, has a big lead over rivals such as the local unit of France Telecom, but its network has been struggling with fluctuating data speeds and dropped calls.

"The next set of investments is going to be around fibre because we have major dependency on fibre," Bob Collymore told the Reuters Africa Investment Summit.

"The data tsunami will come and it will come maybe 12 months or 18 months from now," he said.

Safaricom expects a surge in demand for data services in the east African nation of 40 million people, thanks to an explosion of internet-ready, hand-held devices, an increase in the number of relevant applications and content.

New opportunities

It also sees Kenya positioned as a possible information technology hub for the entire continent.

Safaricom, which has five million data users and 17 million mobile phone subscribers, currently relies on other carriers that have their own fibre networks.

Collymore said the move would improve the firm's services as it will result in the replacement of old cables and those that have been spliced during road construction.

It will take two to three years and involve partnerships with other operators, Collymore said.

"The industry needs to work on sharing infrastructure. We are looking at what would be a sensible model for us so we can do it twice as quickly and at half the cost," he said.

Collymore said Safaricom was also seeking new opportunities for its pioneer mobile phone-based money transfer service, M-Pesa. Started in 2007, it now handles millions of dollars a day in transactions.

Safaricom is in discussions with the central bank to be able to offer more services after an upgrade to the system platform.

Corporate governance

"We need to move into offering micro-saving, micro-lending and micro-insurance," he said.

Apart from transferring cash, M-Pesa users can also pay various bills or purchase airline tickets through the service.

Collymore, a Vodafone veteran who has previously worked in Japan and South Africa, said Kenya can attain its ambition of becoming a regional information technology hub, thanks to a well-educated workforce and investment by private firms.

"Kenya sits head and shoulders above. We just need to get a few things right, and these things are more environmental, and we can easily become the hub, not just of east Africa, but of sub-Saharan Africa," he said.

Among short-term uncertainties are elections due by March in 2013. Collymore also stressed the importance of corporate governance and integrity.

Collymore encountered corporate governance shortcomings when he took over the helm of Safaricom in November 2010, having to fire workers and terminate contracts with dealers for fraud which ran into "a few million dollars".

"We are in a much better shape now than we were a year ago," he said of the experience of fraud at the company.

He added that last year's jump in fuel prices, high inflation and interest rates in Kenya were still affecting businesses.

The shilling fell steeply against the dollar in 2011, forcing policymakers to jerk up the policy rate to 18% from below 7%, within a span of three months.

"The price of fuel hasn't got better. That still remains volatile because you have the externalities as well as the local issues. If you look at interest rates, it is still running at 18%, how long is that sustainable for?" Collymore said.

- Reuters


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