AFSAT ENTERS THE KENYAN MARKET AFTER A TEN YEAR WAIT AND WILL LAUNCH VoIP SERVICES

Telecoms

After unsuccessfully trying to convince the Government to open up the telecommunications sector in the early days of telecom frenzy, Afsat Managing Director, Salim Suleman, did something unusual: he applied for a licence and waited for over ten years.

"We had the capital but we couldn't obtain a licence because there Was no legal framework for private players," said Suleman, the managing director of Afsat Communications Ltd, a London-based satellite data network solutions company. At the time, and until January this year, only state-run Telkom Kenya could operate high- end services like Very Small Aperture Terminal (Vsat) communications.

About 11 years later, though, Suleman's dream has come to pass. The Communications Commission of Kenya, the country's telecom regulator, in January issued Afsat with a licence to operate public data communications services after the segment was liberalised last June. With the force of a ram raring to have a go at its opponent, Afsat has hit the ground running with its flagship product, iWay Africa. "We can now provide Vsat services anywhere in Kenya," said Suleman, a tough-taking manager with an eye for big business. "We have the coverage and ability. Kenyan corporates should expect a revolution in Internet communications."

The company, Suleman said, has invested Sh100 million in Kenya to pioneer Vsat communication in a country where Internet use has hit a growth spurt and related services like Voice over Internet Protocol (VoiP) are beginning to make sense. (VoIP is an advanced way of communicating by using the Internet to carry voice communication from one point to the other.)

The investment was part of the company's Sh600 million investment in Africa for this year. "Our market is bigger than Kenya and we're sure we will recoup our investment and make a profit," he said.

In spite of the ten-year frustration in getting a licence, directors of Afsat maintained their headquarters in Kenya in what Suleman says was "a demonstration of commitment to this country and to keeping Kenyans we had employed in jobs."

It would probably have made economic sense to move the company head offices to, say, Tanzania or Uganda whose governments had issued Afsat with licences as early as 1992 and 1993 respectively.

Afsat is the first company in Kenya to launch a Vsat product targeting small to medium companies. The iWay product was launched in June 2001 as a complementary to the existing product range Targeted at banking networks, said Suleman.

Barely four years since its launch Afsat has rolled out over 2,100 Sites in 22 countries in Africa, a highly sophisticated network managed by an army of tech nerds at the company's headquarters at Wilson Airport, Nairobi. It currently employs over 120 people at its headquarters and its subsidiaries, the manager said.

Suleman said Afsat, through its high-speed satellite broadband Internet solutions, would provide Kenyan Internet users with the Benefits of VSAT. "Most telecommunication infrastructure is mainly found within urban centres and even then it tends to be overpriced, Terrestrial and therefore susceptible to multiple failures," said Suleman, adding that satellite communication is the best way to beat undulating terrains and bad weather that oft-times affect cable networks.

He said VSAT offers subscribers the ability to own telecommunications centres connecting to the Internet in just one hop ˆ office to an orbiting satellite to Internet backbone ˆ for both net access and voice. "No more clogged cables, no more cables cut by falling trees or road-works," he said, almost with a tinge of arrogance.

Through VoIP, for instance, users will be able to call the US for just US$0.05, or Sh4, per minute.

He said most Internet service providers in the country, he said buy bandwidth and broadband from Telkom Subsidiary, JamboNet, and split them to their clients, thus comprising speed and capacity. "Afsat will guarantee clients a speed of 256 kilo-bytes-per-second at a third of the market rates," Suleman said in an interview at the company's offices, accompanied by marketing officer Betty Mwangi, technical manager Job Ndege and customer care manager Nancy Mugo- Matimu.

The company has 2,000 subscribers across the continent and is looking to grow its roaster of clients in Kenya. He said Afsat has 500 clients in Uganda, 300 in Uganda, 45 in Somalia, 90 in the Democratic Republic of Congo (DRC) and 100 in Zambia, among others.

"The market in Africa is huge," he said. "More availability of these services will lower charges, which are currently too high as being charged by the current players."

Afsat is owned by Modern Africa One LLC, a US government-backed venture capital fund (61 per cent), Britain's Wilken Group (15 per cent) and Kenya-owned Milas Ltd has 24 per cent stake.

Betty Mwangi, the chief marketing officer, said even though Kenya had liberalised its telecoms market late in the day, the technology would pick up as soon people start appreciating its advantages. "There will a lag period in the short-term," she said. "But Kenya is quite a star in the region and we expect to see rapid growth after the mystery over satellite communication is cleared."

Mwangi said iWay would service marginalised areas like Lokichoggio and far-flung areas of North Eastern Kenya where ISPs have shied away from due to high costs of installing infrastructure against a small population of clients. "With us you need the service, you get it," she said.

In the meantime, Afsat is increasing its geographical presence in Kenya and, Suleman said, the firm has already commissioned five distributors to sale its services. "Kenyan customers have been longing for Vsat services. Afsat is heavily banking on this goodwill to capture a huge market before new players come in."

Before liberalisation of the Internet backbone segment, operating Vsat communication services was illegal in Kenya. Telkom Kenya was the only locally licensed operator allowed to transmit international calls in and out of the country. However, the post-June 2004 era ushered in a free sector where services like VoIP were opened to private players.

Calls made through the Internet are very cheap compared to the conventional method. For instance, many of those who were offering the service charged as little as Sh10 per minute for calls to the US, whereas Telkom charged over Sh100 per minute, making it too expensive. In the past few months, however, the charges for international calls have dropped to between Sh50 and Sh100 per minute depending on the destination and the time.

Last June Open Systems Technologies, a local public data network operator, learnt the hard way when its satellite equipment was confiscated by CCK after it was discovered to be offering Vsat services illegally. Other players, cashing in on Telkom's inability to exploit its monopoly, operated illegally and made huge shillings by offering VoIP calls.

Suleman said: "The government has taken a strong step to liberalise the sector. So far we haven't seen any hurdle. We will work with the government and modify our relations as situations demand."

Afsat, which has been in the business for over 20 years, has already snapped up storied corporate names like East African Breweries Ltd and BAT Kenya and is gearing up for more.

"For Internet use to grow at a steady rate," Suleman said, "there has to be some economic change to enable people to afford the service."

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