Kenya: Nokia Siemenss Takes on Huawei and ZTE With Leasing Plan
Nokia Siemens will start building telecoms infrastructure for leasing to mobile phone operators as it battles competition from Chinese firms Huawei and ZTE. The firm, along with other European companies such as Ericsson and Alcatel-Lucent had dominated Kenya's telephony infrastructure market until five years ago when the Chinese firms won multi-billion shilling tenders from Telkom Kenya and Safaricom.
Nokia seeks to diversify from network tenders to leasing to avoid competition from the cheaper Asian firms and win over operators looking to cut costs amid a bruising price war. "We are looking forward to offering infrastructure that can be shared as it will be cheaper for firms to outsource rather than invest in individual networks ," Dimitri Diliani, Head of its Africa region at Nokia Siemens told Business Daily last Tuesday.
"This is what will make us different from these Chinese firms both on quality and pricing," he added.
The firm is also introducing smaller versions of telecommunications equipment such as the base stations, which are cheaper to install and operate as it takes on Chinese operators who have won the market with the gadgets.
Telkom Kenya and Safaricom are planning to form a joint company to manage their networks as they seek to cushion earnings that have taken a beating from a more than 50 per cent tariff cut since August. Players in the telecoms sector reckon that Nokia's bid to offer shared network could open a new battlefront with the two Chinese giants that secured contracts with Telkom Kenya and Safaricom. The mobile phone operators have started multi-billion shilling upgrade plans-- with their focus on the advanced third and fourth generation networks fuelling a high stake battle for the contracts that has even pitted Western diplomats against their Chinese counterparts.
The revamp of the networks have been informed by the diversification of the operators business to include internet services to cushion their earnings from falling revenues
So far, Chinese firms have had the upper hand in battle that is also being fought in handsets and tablet (mobile computers) market. ZTE, which earns about half of its revenues outside China, recently beat Huawei Technologies and Europe's Alcatel-Lucent and Ericsson for the Telkom Kenya Sh4 billion upgrade to the 3G network.
This leaves Ericsson and Alcatel-Lucent as the biggest losers in the latest bidding war that has left them without any major local contract despite being dominant in the early 2000s.
Huawei also tied up a Sh12 billion deal with Safaricom for the roll out of the firm's 4G core network while Airtel has partnered with IBM and Nokia Siemens in the 3G network launch and is planning to spend $250 million in the next 18 months to expand its network.