[kictanet] [Fwd: [Fibre-for-africa] Reliance Telecom set to roll into Kenya]

Reliance Telecom set to roll into Kenya Reliance Telecom, the Indian telecoms giant which is the process of building a fibre optic cable between India, through the Middle East to the eastern coast of Africa, is part of a group which Kenyan authorities have allowed to take up the SNO slot. A report in Kenya’s ‘Business Day’ newspaper says Reliance, Triton Group (of Kenya) and Swedish communications firm Swedtel, will this week pay the local communications authority for the licence which Kuwaiti firm Vtel Communications initially won. Reliance hopes to connect Mombasa, Kenya, to the network it is erecting in the Gulf region in the second half of this year. The cable would then proceed to link to Mozambique, Tanzania, Madagascar, Mauritius and South Africa, before end of 2009. Reliance’s entry into Kenya makes their vision easier to achieve, but may require the architects of EASSy and The East African Marine Systems (Teams) to return to the drawing board. Or does it? According to the ‘Business Day’ report, EASSy promoters are in talks with TATA (a competitor to Reliance in their home market) to help put together a team that will give Reliance a run for its money. And where does all this leave the NEPAD eAfrica Commission and the aspiration for Open Access? Wakabi == Reliance to pay Sh12bn for telecom license Written by Kui Kinyanjui India’s Reliance Telecoms and its Kenyan partner are expected to pay nearly Sh12 billion for the second national telephone licence by the end of this week. Triton Group, the Kenyan member of the consortium poised to take up the SNO licence said the group had accepted the Communications Commission of Kenya’s (CCK) offer to take up the licence that was initially awarded to a consortium led by Vtel Communications of Kuwait. India’s Reliance Telecoms and its Kenyan partner are expected to pay nearly Sh12 billion for the second national telephone licence by the end of this week. Triton Group, the Kenyan member of the consortium poised to take up the SNO licence said the group had accepted the Communications Commission of Kenya’s (CCK) offer to take up the licence that was initially awarded to a consortium led by Vtel Communications of Kuwait. Yagnesh Devani, the executive chairman of Triton Group, told the Business Daily that the company will pay for the licence on Friday. “Everything is on course and we have already taken up the offer.” Paying up for this bill will firmly place on course the process of setting up a competitor to Telkom Kenya, nearly years since the process started. The cash kitty will also significantly boost efforts by the Treasury to raise money it had budgeted for and ultimately reduce government borrowing from domestic money markets. This could add further reduce interest rates and strengthen the shilling as banks and insurance companies — which mostly lend to the government find themselves flush with money they cannot invest profitably. Triton and its partner Reliance were offered the opportunity to become Kenya’s SNO two months ago, after the first placed consortium Vtel failed to meet regulatory standards and lost its bid. The last few weeks have seen the regulatory body, CCK, vacillate on exactly when the offer would be formally taken up by Reliance and its partners. As late as yesterday, the regulator would not commit to when the formal announcement of Reliance’s paying up for the licence would be made. Delay in making the announcement has raised industry-wide fears that the battle for the SNO licence would go the way of the third mobile provider which has been in suspension for the last four years. The Reliance consortium had to raise an additional Sh4.1 billion ($58 million) for the license above their initial bid of Sh7.8 billion ($111 million), to match Vtel’s bid offer of Sh11.8 billion ($169 million). It is expected that Reliance will put in an initial investment of around Sh10.5 billion ($150 million) for the licence, leaving its partner Triton to foot the rest of the bill. According to regulation, the consortium will be expected to pay CCK a substantial amount of the licence fee on Friday to act as a bond for the licence. The Reliance Consortium is led by one of India’s largest private telecom service providers, Reliance Telecoms, and Kenya’s Triton Group. Swedish communications firm Swedtel is the technical partner. The entry of the SNO is expected to significantly add pricing pressure in the telecommunication market with the possibility of lowering charges and cutting communications costs across the economy. A national operator has a combined licence, meaning it can handle both mobile and fixed lines services as well as operate an Internet backbone. Under the terms of its licence, an SNO must roll out networks across the country to help shore up the number of people with access to a phone line, or tele-density. United Nations research shows that a one per cent increase in tele-density can lead to a corresponding increase in a country’s GDP of 0.3 per cent. Reliance’s immediate competitor will be Telkom Kenya, which has long disappointed Kenyan companies and added huge costs to their operations. Telkom recently rolled out its wireless platform hoping to take advantage of new revenue streams as consumer interest in land-lines wane. The national operator also has plans to privatize this April, which alongside an upcoming IPO for Safaricom will boost the company’s investment and infrastructure plans ahead of Reliance’s entry. The entry of another internet backbone provider is further expected to lower internet connectivity charges. Internet prices have been on the decline since the government began liberalising the information and communications technology sector three years ago. Kenyans are expected to benefit from improved access to the internet, increased bandwidth, and quicker and efficient services. Reliance is investing a further $1.2 billion on an undersea cable system linking India to Kenya, a move which should expand its already sizable global network and provide the company with ready-made infrastructure that will give it an edge against competitors Telkom, Safaricom and Celtel in coming months. Africa is a budding battlefield for Indian telecommunications companies. Reliance’s competitor Tata is reportedly in talks with the Eassy fibre optic cable consortium in a bid to beat Reliance’s . Friday’s formal announcement of Reliance’s acceptance will see Kenya narrowly escaping the African SNO syndrome, which is characterized by licensing processes stalling mid-way and politics. Senegal is the continent’s most famous case, with its SNO still not operational six years after the government announced its intentions to license a second operator. Politicking around the process has seen the country’s national operator left with monopolistic control over 80 per cent of the market. Malawi’s SNO process has taken almost a year to realize as the country’s regulatory body continually shies away from committing to a bid on technical footing. _______________________________________________ Fibre-for-africa mailing list Fibre-for-africa@lists.apc.org http://lists.apc.org/cgi-bin/mailman/listinfo/fibre-for-africa