Internet Service Providers Record Rise in Earnings in Kenya

Mergers, Acquisitions and Financial Results

Local Internet service providers are earning higher revenues signalling increased use of the web among consumers, industry statistics show. The data indicate that average revenue per user (ARPU), a measure of how each user spends on internet access, has risen to an all time high of $600 in some segments of the market, up from an average of $500 last year.

Globally, ARPU is used as a measure of how much money a service provider makes from the average user and enables the ISPs to make revenue projections as well as determine which products are earning most revenues. It also provides an accurate picture as to what services and products are popular with consumers in certain segments of the market.

"Most ICT firms, however, have indicated application of cost leadership strategies, resulting in lower ARPUs with the intention of raking in higher subscriber number," said Shida Mutuku, the group head of marketing at Africa Online.

The pan-African ISP, which is changing focus from being a pure ISP services company to a supplier of comprehensive IT services, says demand for ICT products is rising across the board.

ISPs can maximise on their resources by using ARPU data to their advantage. ARPU can also be used as a measure of how successful a company is in moving users to new services that are regarded as strategically important.

Citing steadily increasing revenues from its broadband product, AccessKenya Group hopes to realise its projected revenue target from customers looking for better speed and capacity from their internet connection.

Last week, AccessKenya said it was on track to realising an ARPU average of $540 owing to increased number of large customers coming on board and many existing customers upgrading their bandwidth.

The ICT company, which recently announced that it had realised its customer target of 1,720 four months ahead of schedule, says its current ARPU is underpinned by the strength of its Broadband Max 2 leased line solution that has become popular with the corporate market.

"Broadband Max 2 offers a quadruple downlink coupled with high reliability evidenced by a 99.8 per cent Service Level Agreement," said Jonathan Somen, the managing director of AccessKenya.

"We are the only ISP offering this sort of solution in the Kenyan market and have realised significant increase in demand over the past six months," he said. Somen said AccessKenya had set a new target of enrolling a minimum of 1,900 leased line customers by the end of the year, and has been reinvesting some of its profits from increased customer numbers to build up sales and customer service teams.

Africa Online refused to reveal its current ARPUs but said it was targeting ARPU of $1,000 per use by the end of the year. The ambitious target is based on increased demand for corporate leased line solutions and increased take up in the residential user market of the wireless broadband product, Infinet.

Business Daily