Kenya: KPLC Taps New Revenues with Fibre Optic Offer
Electricity distributor, the Kenya Power and Lighting Company, has signed Sh828 million infrastructure sharing agreements with three telecoms operators, opening a new front in the battle for control of the ICT market. The deal gives Safaricom, Wananchi Group and Jamii Telecoms access to KPLC's fibre optic network that runs on the national electricity grid, improving their footprint presence in the country.
Though the contract is specific to the Mombasa-Nairobi cable route, the ability to deliver broadband on the national electricity network puts the three firms ahead of the competition in the ongoing battle for reach and could by extension offer them direct access to some of KPLC's 1.3 million customers on the national grid.
KPLC's fibre optic network should also help telecom firms overcome the bottlenecks associated with long distance bandwidth delivery, which require multi-billion shillings investments and have more recently become prone to frequent attacks.
"We have 18 pairs of fibre for leasing and have only awarded three to Safaricom, Wananchi and Jamii Telcoms leaving us with 15 more on the Nairobi-Mombasa route," said Mr Joseph Njoroge, the KPLC CEO at a contract signing session in Nairobi.
By offering its fibre network to other players, KPLC is effectively elevating broadband service to basic utility status - in the same rank as water, power and the telephone. For shareholders in the electricity firm, signing of these contracts also opens a new revenue stream that should help lift the company's profits in the current financial year.
KPLC began the journey into the telecoms sector in 1998 when it unveiled a Sh1.9 billion investment in a fibre optic network to help monitor its power lines and lease excess capacity to telecoms operators.
Until Tuesday, the power distributor had only allowed telecoms operators to build cables on its electricity distribution poles in specific sections of Nairobi. KPLC began the search for leasees last August and received 15 applications from both local and international firms.
On Tuesday, Jamii and Wananchi separately signed five-year lease agreements with KPLC for a pair of fibres on its cable at an annual fee of Sh27 million. Mobile phone service provider Safaricom placed the heaviest bet on the fibre line, sinking Sh288 million for a 20-year access right. Safaricom, which depends heavily on terrestrial fibre networks said it was keen to use KPLC's network to overcome service delivery challenges arising from fibre cuts.
Safaricom CEO Michael Joseph said the deal would see the mobile firm shift its live traffic between Nairobi and Mombasa to KPLC's cable in the next two weeks. "With this contract, vandalism could become a thing of the past. In the medium term, we see this agreement as pushing down cost in the telecoms market," he said.