Telkom Kenya Bets On Mobile Telephone Licence

Telecoms

France Telecom’s new CEO Dominic Saint-Jean (fresh from Mauritius Telecom) has laid out his strategy in an interview with Michael Omondi of Kenya’s Business Daily. He wants Telkom Kenya to become the number two player in the market after Safaricom and is putting high hopes its new mobile licence.

Kenya has leapfrogged into sixth position in the ranking of nations with the highest number of mobile phones in Africa. The number of mobile phones in Kenya exceeded 11.5 million by the end of last year. Countries with more connections are South Africa (42.3 million), Nigeria (40.4 million) Egypt (30 million), Algeria (21.5 million) and Morocco (20 million).

Q: In the France Telecom family you are known for your turnaround efforts from Argentina to El Salvador and Mauritius. What are some of your key assignments that would help turnaround the loss- making Telkom Kenya?

We have four actions for 2008 and these include the launch of our mobile telephony business in September, optimisation of costs and revamping our Internet business, which has plenty of potential now that optic fibre cable is set to be completed by next year.

But our key priority is the mobile telephony division that will play a key role in turning around the business, given its growth potential, making multi- billion investments for this unit. But on top of all these, restoring quality to all our divisions will be crucial since our vision is not only GSM.

Q: Besides the mobile telephony, which other business segments does Telkom Kenya intend to reinforce its activities?

We are trying to model ourselves as a telecommunication supermarket where clients find everything from fixed telephony, mobile telephony to Internet broadband and television services. In fact, we are the only player in Kenya who can easily offer this integrated solution and it is a critical competitive edge.

Q: How soon should the market expect Telkom Kenya to return to the profit zone?

We are investing billions and this is for the future. Fruits from these investments should be realised from 2010. So, we expect the firm to start making profits from mid 2010.

Q: What's your take on concerns that Telkom Kenya is running late in unveiling its mobile network and that it risks being locked out of the market place?

Yes, time is critical but being late is relative. We are also watching what the rest of the market is doing and will do our homework very well. Our strategy is to give Kenyans what they have been lacking, and this means increased service offerings at competitive rates.

Q: Now that you're going big on the GSM mobile market, what plans do you have for your CDMA network?

We are not going to stop the CDMA network. We have big plans for the wireless business and will use it to boost or subscriber base by targeting corporate bodies and the small and medium enterprises. Its full potential is yet to be realized.

Q: A price war is unfolding between the two mobile phone operators- Celtel Kenya and Safaricom- as they race to grow and maintain their customer numbers. Is Telkom Kenya set to join this war once it unveils it mobile telephony network in September?

We are not going to be part of the pricing war. Our intention is to make life easy for clients by offering high quality services at competitive rates. This does not mean our services will be expensive but value for money. We intend to offer a bundle of services (Internet, mobile, TV and mobile) that will be expensive than what our competitors are offering but when knocked down into single unit will be offering very competitive rates.

Q: How low do you expect the calling rates to fall? And what would be the impact of rock bottom prices on the industry?

I cannot give a definite answer to this since pricing is a dynamic process. But the falling prices can only mean one thing: Low quality services.

Q: Kenya's cellular phone market is price-sensitive. How do you expect to penetrate this market by offering prices that do not fall below your competitors?

We going big on market differentiation and we are not going to offer basic services but a big portfolio. The fact that we have different businesses including Internet, landline, wireless and cellular that our competitors lack, means we can offer a bundle of services that our competitors would not be able to offer.

It this unique position that will separate us from the rest of the players and give us the much needed competitive advantage.

Q: Which towns and target market is Telkom Kenya seeking as it seeks to grow its share of the mobile telephony market?

We cannot cover the whole of Kenya in one day. Will start with the major towns especially Nairobi and Mombassa and spread to the rest of the country gradually. From a market point of view, Telkom Kenya will address all segments of the population but give more emphasis to small and medium enterprises as well as corporate bodies, which have not been covered sufficiently.

Q: Current mobile operators have lowered their charges in a move aimed at locking their subscribers to their networks and deny Telkom Kenya access to their subscriber base. How does Telkom Kenya intend to go around this strategy?

Our strategy rests on offering superior and high quality products because we have seen there is a gap in the market and Telkom Kenya will fill it. We have experience borrowed from our global operations and the high quality network we are preparing will make our cellular network very attractive.

Again, the bundled services will make it easy to get our competitors subscribers. So locking in subscribers is not a big issue to us.

Business Daily