Econet increases investment to US$300 million for Network Roll-Out in Kenya as talks on infrastructure sharing stall


Econet Wireless has set aside $300 million to secure its position as the third mobile phone service provider in Kenya, a top company official has said. Phillip Mudimu, the chief executive of Econet Wireless Kenya, said the money is to be spent on the initial roll-out of the network in Nairobi and other major towns.

Analysts said this big roll-out budget was a sign that the company's infrastructure sharing plan was facing major hurdles."There has been very little progress on infrastructure-sharing front. We are now acting on the assumption that this option will not materialise," said Mudimu.

Econet's late entry into the Kenyan market was expected to be hinged on the signing of infrastructure sharing agreements with existing players Safaricom, Celtel or Telkom. Failure to sign any infrastructure sharing agreement has left the company with no option but to purchase its own base stations-a cost it had not initially factored into its roll-out plan.

John Waweru, the director-general of the Communications Commission of Kenya, however reckons that there should be no difficulty in the sharing of infrastructure. "Real competition is on services, not infrastructure," Waweru said.

Econet has set a three year deadline for country-wide coverage with service differentiation as its key selling point. "Other players gained temporary competitive advantage on the coverage front but we intend to enter the market with a strong service offering," said Mudimu.

Even as the countdown to the deadline for its roll-out draws closer, Econet reckoned that it will be the duopoly breaker in the Kenyan market that remains in the grips of Safaricom and Celtel.South Africa-based Econet is expected to be in the market by end of June. Mudimu said the company was on track to beating the August deadline for the roll-out of its services.

Implementation started last month with the recruitment of staff and mobilisation of funds. The programmes started after Kenyan shareholders, blamed for the four year delay of the roll-out, paid for their stake in the company.

In January, it emerged that Econet International, EWK's parent company, had sold 49 per cent of its shares to Essar Global - an Indian conglomerate. Sources told Business Daily that the deal had secured almost half a billion dollars for the network roll-out.

Econet is expected to push for number portability as part of its entry strategy to give it a competitive edge in the market. Waweru however maintained that number portability would only be feasible in the next three years.

Business Daily