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KAI WULFF, CEO OF KDN ON ITS PLANS AS A "CARRIERS' CARRIER" AND ITS INVOLVEMENT IN THE EASSY FIBRE PROJECT

What is KDN’s strategy?

We want to be a “carriers’ carrier. We’re a member of the Sameer Group and it believes in building infrastructure to fire up the economy. We’re not an ISP and we’re not providing minutes. We believe that if we provide infrastructure, everything else will follow.

What are your expansion plans?

We started as a pure public data network operator but we had no international licence. We obtained our international licence in January 2005 and also a local loop licence. With the local loop, we wanted to be “first-to-market” with Wi-Max, using Alvarion’s BreezeMax solution. It works well both in urban and remote areas.

We’ve rolled out fibre in Nairobi and Mombasa. We’re in the process of laying fibre between Nairobi and Mombasa which will be completed by the first quarter of 2006. We’re likely to be ahead of Telkom Kenya. We’re also building a link to Uganda that will be completed by the third quarter of 2006. It will go as far as the border and connect with both MTN and UTL. We’re also building to Namanga in Tanzania and are interested in expanding into Tanzania to provide backbone facilities.

We’re in the final stages of negotiation with a Somali operator for a link to Somalia using VSAT and microwave. We also have interests in Southern Sudan linking some VSATs there and want to grow the market.

Within Kenya, we want to connect the other Kenyan centres but not necessarily on fibre but also with microwave connections.

The total investment will be USD330 million.

Who are your customers?

Anyone who wants to buy bandwidth but we will only sell to those who have licences.

What’s your current level of traffic?

75% is outbound traffic and that is 70 mbps. Inbound is less than outbound and we’re selling a maximum of 1:1. After 95% of capacity is sold, we keep the rest for redundancy.

What’s the current price of a Nairobi-London link?

A duplex link of 1 mbps costs USD6500 and that is managed and uncontended. Our profit margin is USD200 per mbps because it’s not our business to fill the international link. Domestic is our core business. If international was our business, we’d be competing at the wrong level.

We are an MOU partner in the EASSy fibre project with a two digit dollar investment. There was a meeting in Cape Town and the consortium established that it had all the required investment. There’s 20 MOU partners, most of which are parastatals (government-owned companies). The private sector involvement is ourselves, MTN (who are the largest investor), Dalkom and a Tanzanian company.

What impact do you think it will have on current pricing?

It may lead to a 20% reduction in current pricing. The consortium still hasn’t sorted out its interconnection to Flag and Falcon. Djibouti may be the chosen interconnection point.

We will provide backhaul for EASSy to landlocked countries. We are rolling out telephone infrastructure which will allow terminations to whoever has a licence for voice. We plan to install capacity for 2 million mixed telephone/broadband lines. Most of that capacity will be here in Kenya. Fixed lines are a good anabolic to speed up the growth of the economy.

How is Telehouse doing? There were many sceptics when it first launched.

It’s still there and it has 50 clients. Some have only one router, whilst others have a full cage or multiple cages. People have understood the concept of interconnecting.

The Sameer Group has an interest in power supply. Will it be wanting to buy Kenya Power and Light Company (KPLC – the Government-owned power utility) to use its lines for fibre routing?

It’s unlikely. The power company is a separate part of the group and is interested in power generation.

Who’s the Sameer Group and who’s behind it?

It’s one of the largest investment groups in East Africa. The main investor is its Chairman Mr Naushad Merali. The group contributes 3% of the GDP of the region.

What’s your own background?

I had an IT Company in Germany and I came to Kenya 7 years ago to run the largest tourism company here. I started with KDN in April of 2004.