INVESTORS NOW SHY AWAY FROM FIXED LINE TELEPHONY

Mergers, Acquisitions and Financial Results

Declining global investment in fixed line telephony is likely to undermine Kenya's search for a second national operator. Dr Cosmas Zavazava, a senior International Telecommunications Union (ITU) official says Africa governments should try to make their national operators more efficient if they are to attract foreign investment.

Speaking in Nairobi, Zavazava said investors have instead switched to the cheaper and more efficient wireless technology at the expense of the fixed line, which requires heavy investment.

"They are keen on mobile telephony with few of them willing to commit Money in the more expensive fixed line segment," he said.

He, however, said that the existing fixed line operators would still remain the backbone in the telecommunication service provisions.

He said privatisation was the best option to make operators in Africa to be more efficient. The Zimbabwe national, however, pointed out that African governments had lost an early opportunity to privatise their inefficient units by adamantly refusing to open up the sector despite growing foreign interest.

"We struggled in vain to convince African leaders to privatise these utilities when the global market was good."

In Kenya, the licensing of the second national operator failed to take off owing to controversy over the tendering process. Information and Communication minister Raphael Tuju has called for fresh bidding for the Sh2 billion license, citing irregularity in the earlier process.

Zavazava said the tele-density in African remains at one phone for every 1,000 people, a rate that is considered the lowest in the world.

The DRC Congo has the lowest coverage of one line for every 25,000 people.

He said unless policymakers adopted more friendly policies to attract new investment, the continent would remain marginalised.

"Africa has the best opportunity to leapfrog by taking advantage of the state-of-art technology that has come up in recent years."

Telkom Kenya is the sole fixed line operator and efforts to improve its services over the years have been futile.

The Communication Communications of Kenya (CCK) has, however, officially removed its five-year monopoly to pave the way for the entry of new players.

CCK also hopes the changes would help lower Telkom Kenya's tariff charges, including international call tariffs and Internet costs.

Kenya is now ranked fifth in the continent in terms of mobile connectivity having overtaken countries that opened their telecommunication sectors earlier. The country is ahead of Tunisia, Algeria, Cameroon, Cote d'voire and Uganda.

South Africa with 16.8 million subscribers leads Morocco and Egypt with 7.3 million and 5.7 million respectively.

East African Standard