700,000 Orange mobile subscribers in Kenya since September


Kenya's Orange is confident of becoming market leader in data services once high-speed Internet hits Kenya this year, having won 700,000 mobile subscribers since launching mobile services last September.

Orange, once the state-owned landline monopoly Telkom Kenya and now majority owned by France Telecom , has been investing heavily to improve its fixed-line network ahead of the arrival of submarine cables allowing high-speed broadband.

Chief executive Dominique Saint-Jean said the SEACOM undersea telecommunications cable should be ready for use at the start of the third quarter and The East African Marine Cable (TEAMS) up and running during the same period.

"This is why Q3 and, to be on the safe side H2, is the big change in the landscape of international connectivity in Kenya," Saint-Jean told Reuters in an interview on Monday.

"In this case, I think that we have a position where competition will be quickly overcome. It's not like with GSM. We are much more confident of taking the leadership soon."

Saint-Jean said mobile subscriber numbers were in line with its target of 1.5 million by the end of 2009, but said most users were taking Orange as a second or third mobile line and average revenues per user (ARPU) were low.

"As far as gross connections are concerned we have exceeded 700,000. Now as far as net goes -- permanently utilised -- we are busy working on improving the connections," he said, adding Orange had about 500,000 "net" mobile users.

Safaricom , 40 percent owned by Britain's Vodafone dominates the Kenyan mobile market of 15 million users with a 77 percent share. Second is Kuwait's Zain which has been slashing tariffs to woo customers.

Orange has been on an intensive marketing drive, offering low tariffs and putting up 500 base stations since last year. "It is the ARPU that is worrying us a little bit," said Saint-Jean. "The ARPU is lower than 200 shillings, or 2 euros, per month which is probably something, as I said, where we have to innovate to boost this."

"Safaricom (ARPU) is probably higher, but this is basically because they have a big customer base in the corporate segment and this is the segment that we will in fact soon address in a very innovative way," said Saint-Jean.

He said the undersea cables project was "less visible and has less impact on the day-to-day life of Kenyans but it's a huge project. It will give us an important competitive advantage in order to address the needs of the corporate segments, SME segments."

The company spent 10 billion shillings ($124 million) on infrastructure last year and plans to spend 8 billion shillings this year on its fixed-line, broadband, mobile and wireless Internet networks.

Saint-Jean said the money would be raised locally and that Orange was looking at different funding options. "Of course, the situation of the world and the financial crisis is putting some additional pressure which had not probably been envisaged, but it is not changing the basis of the huge investment," he said.

Saint-Jean said two more submarine cables were due to land in 2010 -- the Eastern African Submarine Cable System (EASSy) and the France Telecom/Orange Lion cable.

He said the latter would go from the French-run Indian Ocean island of Mayotte to Mombasa port and that having more cables would mean Orange could offer the reliable Internet critical for outsourcing businesses such as call centres.

Orange will also start promoting its wireless Internet service using EVDO technology soon to take on Safaricom's 3G product. Saint-Jean says will match its rival for speed and has a greater footprint in Kenya.