Tariff Cuts Repulsing Investors says Telkom Kenya’s CEO

Mergers, Acquisitions and Financial Results

Mobile telephony in Kenya has lost the shine to attract investments owing to major cut in tariffs, Telkom Kenya CEO Mickael Ghossein has said. The company which has announced plans to inject Sh8 billion this year to build infrastructure for improving its network in addition to Sh7 billion invested in 2010, says it does not expect immediate returns on the investment.

With uncertainties in the market and increasing global cost of doing business it is pushing hopes of return on their investments to between five to eight years. "We keep on investing but the returns are not assured, expectations for 2011 are worse," said Ghossein in an interview.

Telkom has been in the forefront of lobbying for a stop to further reduction in mobile interconnection rates. "Voice has become more or less free. globally, there are big hopes in data," he said adding the roll out of its 3G next month will boost its share in the data market. Telkom has also postponed plans to launch its triple play technology which would have seen it add cable TV to its voice and data offering.

Ghossein says this would call for money to be put in IPTV (Internet Protocol television) a system through which Internet television services are delivered but they are short of money to do it "This country has big potential, but with low revenues there is no enough money to invest back," adding lack of content was also an issue.

According to CCK figures, Orange managed to increase its GSM service subscriber numbers by almost a million between October and December to get 8.5 market share. It is targeting to 2.8 million subscribers by the end of this year and hoping to take the second position -currently held by Airtel - in the next two years.