gcr kenya -telecom

7/28/2019 GCR Kenya -Telecom

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A

GLOBAL/ COUNTRY STUDY AND REPORT

ON

TELECOM SECTOR OF THE KENYA

Submitted to

MARWADI EDUCATION FOUNDATIONS OF INSTITUTIONS, RAJKOT

IN PARTIAL FULLFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

IN

Gujarat Technological University

UNDER THE GUIDANCE OF

Prof. Hemali Tanna

(Assistant professor)

Su bm i t t e d B y E n r o l lme n t No .

Soyabmahamad 117340592173

Hina Ranpariya 117340592175

Sagar Chotai 117340592176

[Batch: 2011-13]

MBA SEMESTER III/Iv

Marwadi Education Foundations of Institutions, Rajkot

Affiliated To Gujarat Technological University, Ahmedabad

April 2013


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STUDENTS DECLARATION

We, Soyabmahamad, Hina Ranpariya, & Sagar Cho tai ,hereby declare that the report for

Global/ Country Study Report entitled TELECOM SECTOR OF THE KENYA is a result of

our own work and our indebtedness to other publications, references, have been duly

acknowledge.

Place: Rajkot

Date: _______

Soyabmahamad ____________

Hina Ranpariya ____________

Sagar Chotai ____________


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PREFACE

In todays era of global business activities, we can understand that all of the countries are

trying to become a global one. So they are connecting their business activities with the

countries of the world. And from the earlier system of bartering the goods, monetary aspect

has been synchronized and modern business system has been established.

We know that, majorly trades are done for goods and services. And for that all countries are

generating exports as well as imports. From this, country can be able to earn foreign

exchanges and it will be helpful to grow the economy of the country.

There are majorly three kind of divisions are made according to the economy of the country

i.e. developed country, developing country and under-developed country. Each under-

developed countries of the world will consume the resources and become developed

gradually. These African countries are coming under under-developed stage and Kenya is

one of them.

Here according to our title, we are going to get highlights of major trading partners of Kenya,

in which we get the knowledge of countries with whom Kenya is dealing and getting different

goods, the quantity of the goods as well as how it is affecting to the economy of Kenya.

As far as Kenyas trade is concerned, India is one of the major partners of it. So we will get

more emphasized detailed study regarding the dealings and business transaction of Kenyan

economy with Indian economy. And so we will understand that importance of their differentgrowth related to different exports/imports of goods and services included with Indian

transactions.


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ACKNOWLEDGEMENT

It is a moment of pleasure that to present this report undertaken by us as country research of

Kenya for the part of our Master of Business Administration. Having completion on the

moment of the partial project work, we realized the importance of the people who have

supported us.

First of all, we are giving credit of our work to the dean sir of our MBA Department of our

college, Dr. S.C. Reddy. He has allotted us this great work, which can be a part of our overall

growth of the knowledge along with professional opportunities to work outside India.

We would like to express our gratitude to our guide, Prof. Hemali Tanna for helping us at all

the moment of difficulties. She has put her time and efforts along with us without considering

her personal inconveniences or pressures of her other works. So we are sincerely thanking

her for the same.

Here in this work of group efforts, how can we forget the activities of our group member? So

we, the members of our group are thankful to each other and we achieved the experience of

team work, which we can utilize for our further carrier in our life.

We have utilized the helping resources for accumulation of the data and other necessary

information. For that todays smart technological environment and other equipment have

played vital role for partial completion of this global country report on Kenya. Today world has

become just like the global village that no places are remaining without the touch of thetechnology. And we have taken benefits of the same.


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CONTENTS

INTRODUCTION .................................................................................................................................................. 1

PHENOMENAL MOBILE PHONE GROWTH ................................................................................................. 4

MARKET SIZE OF KENYA ................................................................................................................................ 4

INTERNET DEVELOPMENT ............................................................................................................................. 5

KENYA EXPANDS BROADBAND NETWORK.............................................................................................. 6

HYSTORICAL EVOLUTION............................................................................................................................... 7

BUSINESS ACTIVITIES OF TELECOM SECTOR ........................................................................................ 9

COMPARISON OF TELECOM SECTOR OF KENYA WITH INDIA ......................................................... 17

PRESENT POSITION AND TREND OF BUSINESS ................................................................................... 23

POLICIES AND NORMS................................................................................................................................... 23

POLICIES AND NORMS OF KENYA FOR TELECOM SECTOR ............................................................. 25

GOVERNMENT POLICY ON ICT SECTOR .................................................................................................. 29

RECENT POLICY CHANGES IN INDIA AND THEIR IMPACT ................................................................. 30

BUSINESS OPPORTUNITIES......................................................................................................................... 28

BUSINESS OPPORTUNITIES IN FUTURE .................................................................................................. 31

CONCLUSIONS ................................................................................................................................................. 33


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KENYA TELECOM SECTOR


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1

INTRODUCTION

The telecom services have been recognized the world-over as an important tool for socio-

economic development for a nation. It is one of the prime support services needed for rapid

growth and modernization of various sectors of the economy.

The Kenyan Information and Communication Technology (ICT) sector is poised for a

technological explosion in future as the government is bracing itself to supply the human

resources, legal structures, finance and infrastructure in order to support ICT initiatives.

Also, all the technology-related equipments are readily available in the country due to the

presence of distribution centers of various technology and hardware manufactures.

Since the beginning of the liberalization of the telecommunications sector in 1999, Kenya

has seen fast internet growth and even faster mobile phone growth. Encouraged by thisdevelopment, the government has plans to turn Kenya into eastAfricas leader in information

and communication Technology (ICT). Since 1999, Kenya has experienced radical changes

as the liberalization process of the telecommunications sector began. Of vital importance to

the process was the establishment of the communications commission of Kenya (CCK) in

February if the same year through the Kenya communication acts, 1978. CCks role is to

license and regulate telecommunications, radio communication and postal services in

Kenya. Since then a visible boost has gripped the industry.

Spectacular failure of many national economies in Africa and Asia under nationalization and

central planning makes the Kenyan case of wide interest and significance for those


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concerned with development strategy. The economic role of the telecommunications sector in

Kenya has been the subject of significant economic and business research. Based on that

research and on a series of field interviews carried out in June 1991, we have drawn several

conclusions:

Expanding the scope and enhancing the quality of the telecommunications services offered

to rural and urban businesses yields economic benefits far in excess of the costs incurred.

Despite major expansion of the public network during the 1980s and early 1990s, there are

still un-served or underserved user requirements of major economic significance; there are

large direct and indirect benefits in foreign-exchange earnings to be derived from improving

telecommunications services; these benefits are particularly valuable to a country like Kenya

with an economy strongly linked to international trade.

The challenges faced by the makers of telecommunications policy in Kenya are exceptionally

demanding. To meet of economic needs, it will be necessary to expand the network, enhance

service quality and features, and upgrade operational efficiency and productivity. Kenya has

a rapidly expanding economy, but also has one of the world's highest population growth

rates--by the year 2000 its population is expected to reach 38 million. Kenya will also need to

invigorate agriculture and enhance the lives of those in its rural areas to stem the tide of

migration into the towns. Five million new jobs will be needed in the urban areas if the

country is to avoid massive unemployment and social unrest.

Kenya's government has responded to these challenges with a market-oriented economic

policy, which emphasizes openness to the world economy and export-led growth. This policy

necessitates a more universal and reliable telecommunications network than would be

needed had Kenya attempted a predominantly inward-looking, centrally-directed economic

strategy similar to those attempted by some other African countries.

As in other countries that rely to a high degree on exports for both job creation and foreign

exchange, economic policy in Kenya must ensure that the export sector is fully competitive in

the global marketplace. As this chapter will show, the mere availability of a commodity for

export (or of a tourist attraction to draw in visitors) is less and less a sufficient condition for

economic success. Quality, productivity, effective marketing and distribution in global

markets, superior customer service, and speedy and appropriate responses to changing

market conditions are all essential. An efficient and reliable telecommunications infrastructure

is essential to achieve these goals.


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Moreover, successful export economies need the participation of global corporate leaders to

set the pace for quality, technology, productivity, and innovation by implementing global "best

practices." Their direct investment, though useful, is not as indispensable as their broader

role as innovators, pace setters, and conduits for the transfer of technology and "best

practices." In Kenya, these global companies directly and indirectly support hundreds of

smaller companies and tens of thousands of employees. The operating methods of such

global companies require extensive use of both voice and data telecommunications,

domestically as well as internationally. Experience shows that global companies will focus

their management efforts and their investments where adequate telecommunications (as well

as other preconditions for productive, effective operations) permit them to remain globally

competitive

The history of economic development from the 1970s to the 1990s, especially the

spectacular success of export-led growth in certain newly industrialized countries in Asia

such as South Korea and Thailand, and the equally spectacular failure of many national

economies in Africa and Asia under nationalization and central planning, makes the Kenyan

case of wide interest and significance for those concerned with development strategy. The

economic role of the telecommunications sector in Kenya has been the subject of significant

economic and business research. Based on that research and on a series of field interviews

carried out in June 1991, we have drawn several conclusions:

Expanding the scope and enhancing the quality of the telecommunications services offered

to rural and urban businesses yields economic benefits far in excess of the costs incurred;

Despite major expansion of the public network during the 1980s and early 1990s, there are

still un-served or underserved user requirements of major economic significance; there are

large direct and indirect benefits in foreign-exchange earnings to be derived from improving

telecommunications services; these benefits are particularly valuable to a country like Kenya

with an economy strongly linked to international trade.

The substantial net in-payments of hard currency accruing to Kenya from

telecommunications carriers in other countries through the international settlements process

could be used as collateral for the financing of major investments in telecommunications.

This approach could help sustain the high rate of telecommunications sector investment that

is clearly require--a rate that might otherwise be difficult to sustain because of the financial

state of the Kenya Post and Telecommunications Corporation (KP&TC).


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This chapter reviews the efforts that have been made in Kenya to understand and meet the

telecommunications needs of economic development. It draws conclusions about the challenges that

must be overcome if the telecommunications sector is to play its essential role in supporting and

enabling continued economic growth--especially the continued growth of exports. It also offers some

ideas regarding the future of the telecommunications sector in Kenya.

PHENOMENAL MOBILE PHONE GROWTH

In 2000, some 180,000 Kenyans had access to a mobile phone. Bye the end of 2006 that

figure had grown to 7.3 million people an increase of more than 4000 %.

The fast-growing mobile sector is characterized by competition between two operators:

Safaricom, a 60/40 percent joint venture between the government-owned Telkom Kenya and

Britains Vodafone; and Celtel, a subsidiary of Africas third ranked phone company. Both

companies have made considerable growth and profits since their inception but still there is

enormous potential remaining in the mobile phone sector.

In March 2007, global telecommunications giant Ericsson opened a regional hub in Nairobi

as part of its ongoing emerging markets expansion programme. The mobile phone sector

currently accounts for 5 percent of Kenyas GDP and analysis show the sector as holding

great potential for further growth once a third mobile phone services operator is introduced

and mobile phone taxes are lowered.

MARKET SIZE OF KENYA

The total number of mobile subscribers in Kenya at the end of 2009 was 19.11 million,

resulting in a penetration rate of approximately 48 percent.

Total mobile subscribers in the country have increased at a rapid rate of approximately 459

percent from 3.42 million at the end of 2004 to 19.11 million at the end of 2009. The

corresponding increase in the penetration rate during this period has been from around 5

percent to 48 percent.

The country's mobile subscriber base is expected to increase further over the next few years,

resulting in a mobile subscriber base of 30.58 million and a penetration rate of 68 percent by

the end of 2014.


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INTERNET DEVELOPMENT

Kenyas internet sector has managed to grow considerably over 10 years with what started

as a handful of dial-up modems in 1995 evolving into a dynamic industry with numerous

internet hosts, nearly 100 licensed internet service providers (ISPs) and roughly 2.7 million

internet users in the country. There is an abundance of internet cafes in the main urban

centers and wireless technologies are available throughout Nairobi.

The Kenyan government has launched an e-government strategy, a programme that intends

to connect the countrys rural population. Beyond downloading pension forms and

embarking on other virtual interactions with Nairobi, citizens in the e-government Internet

Caf can access helpful information.


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KENYA EXPANDS BROADBAND NETWORK

The government is now supporting several projects aimed at boosting the countrys

broadband infrastructure with the most high-profile projects being the East Africa Marine

System (EAMS) and the East Africa Submarine cable System (EASSY), initiatives that will

connect the countries of eastern Africa via a high bandwidth fibre optic cable system with the

rest of the world. TEAMS, a multi-million dollar fibre optic cable link from Mombasa to Fujaira

in the United Arab Emirates, are expected to link East Africa to the rest of the world.


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HYSTORICAL EVOLUTION

Development of the Public Telecommunications Network Kenya's earliest

telecommunications connections to the outside world were the submarine cables linking

Zanzibar, Mombasa, and Dar-es-Salaam laid by the Eastern & South African Telegraph

Company in 1888. Internally, the construction of a telegraph net work began with a 200-mile

coastal line linking the port city of Mombasa with Lamu. Extension into the interior of the

country began in 1896 in conjunction with the building of the railway system, forming a dual

"backbone" for Kenya's communications infrastructure. The extension of the telegraph line

even overtook railway construction, reaching Nairobi in 1898 and Kampala and Entebbe in

Uganda in 1900. Telephone service soon followed. In 1908, the public telephone network

began service in Nairobi, the capital, and in Mombasa. In Nairobi that year, eighteen

telephone subscribers were connected.


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The subsequent history of Kenya's network was one of gradual but sustained expansion. By

1980, there were 73,932 direct exchange lines (DELs) in use in the public telephone network;

just over 84% were connected to automatic switching equipment and 75% ha d direct long-

distance dialing (STD or subscriber trunk dialing) capability. There were 1,228 telex lines in

use and 50 leased data transmission circuits in use. The network of 1980 represented a solid

foundation for future expansion even though it had significant shortcomings: 33% of long-

distance call attempts failed due to congestion, and at any given time 15% of exchange lines

were not in working order. [KP&TC Annual Reports; Tyler and Jonscher, 1982.]


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Business activities of telecom sector

Kenya's telecom market has had great potential for growth because of its previous low

penetration levels in both fixed and mobile markets.

2004 saw significant changes in the country's telecom industry, with the incumbent operator

Telkom Kenya losing its monopoly in the fixed-line and internationals bandwidth sectors.Licenses were also issued to a regional carrier, third mobile operator and several new data

carriers, thereby marking a significant change in the competitive landscape for telecom

services across the country.

The last five years has seen rapid growth due to new players entering the market, the

introduction of 3G services by the telecom operators and, very recently, duty being waived on

new mobile handsets and the allowance of number portability.

The official telecom regulatory body of the country is Communications Commission of Kenya

(CCK).

In 2009, the Government recognized these rapid changes and developments in technology

and introduced the Kenya Communications (Amendment) Act 2009. They are now

responsible for facilitating the development of the information and communications sector

and electronic commerce.

Mobile Market


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Mobile services in Kenya were pioneered with the launch of an ETACS network in 1993. But

due to issues such as the high cost of handsets and high charges for the service, the number

of mobile subscribers at the end of 1999 was only 20,000.

The number of operators providing mobile services in Kenya has now increased to four and

with improving mobile infrastructure there is coverage in all major towns and highways in the

country. The price of handsets has reduced due to the duty being waived by the Government

and the increase in operators has intensified competition leading to price competition in the

market.

Safaricom still dominate the market with a market share of 79% and the number of

subscribers had risen to over 19 million in 2009.

The CCK is planning to introduce number portability by the end of July 2010 which will give

mobile phone subscribers the option to switch between service providers without changing

their phone number. This is likely to work to the benefit of the smaller operators.

Market Size

The total number of mobile subscribers in Kenya at the end of 2009 was 19.11 million,

resulting in a penetration rate of approximately 48 percent.

Total mobile subscribers in the country have increased at a rapid rate of approximately 459

percent from 3.42 million at the end of 2004 to 19.11 million at the end of 2009. The

corresponding increase in the penetration rate during this period has been from around 5

percent to 48 percent.

The country's mobile subscriber base is expected to increase further over the next few years,

resulting in a mobile subscriber base of 30.58 million and a penetration rate of 68 percent by

the end of 2014.

Mobile Network Operators

Kenya's mobile market has four key players - Safaricom, Bharti (was Zain), Telkom Kenya

(Orange/France Telecom) and Essar Telecom Kenya (known as the brand Yu).

Safaricom dominates the market holding about 79 percent share and they currently believe

that they are being targeted by new competition rules introduced by regulators to safeguard

against abuse of their market dominance.


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The other market players welcome the rules as an attempt to monitor market segments

where there is a monopolistic situation and no form of price control.

Major players in market

Beeper Communications Limited

"Beeper Communications Limited is a local company launched in Nairobi in July 1998.

Operational also in Mombasa, Nakuru, Kisumu and Eldoret. Aims to offer advanced

telecommunication services as an alternative to similar services currently available in the

market, and to create a competitive environment in the industry by providing high quality

products at prices that are accessible to the majority of customers."

Broadcast Automation Technologies Ltd.

"Broadcast Automation Technologies Limited(BATL) specializes in a wide range of products

& services for the broadcast & I.T. industries."

Cellular Services(K) Ltd.

Cellular Services (K) Ltd. is a private telecommunication company specializing in mobile

phone Services. The company started its operations in September 1999. The main objective

was to provide cellular phones and related services, educate professionals and the general

public on the importance and needs of using cellular phones in day to day undertaking and

as an alternative communication means."

Beeper Communications Limited

Broadcast Automation Technologies Ltd.

Cellular Services(K) Ltd.

Monier International Limited

Telebell Limited

Safaricom Ltd
http://www.beeperkenya.com/http://www.batl.net/http://www.cellularkenya.com/http://www.cellularkenya.com/http://www.batl.net/http://www.beeperkenya.com/


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Monier International Limited

"Monier International Limited was established in 1991 to satisfy the growing need for high

quality advertising in the fast changing African market. Main head office is situated in Nairobi,

Kenya with branch offices in Dar es Salaam-Tanzania and Asmara-Eritrea. Advanced plans

are under way to open more branches in Addis Ababa-Ethiopia and the rest of Africa where

our products are sold. Monier International also works in partnership with L.A.D.M.Investment situated in Israel and is thus able to keep abreast of new technological

innovations in the field of outdoor advertisement. Monier International was the first company

to introduce the full colour photographic billboard posters to the East Africa Market."

Telebell Limited

"Telebell Ltd has been the market leader in telecommunications for the last 5 years. As a

registered vendor with KPTC Telebell Limited holds the agency for B.T. from the U.K. fortelecom equipment. In a rapidly increasing market Telebell offers the world renowned

Panasonic telecommunication products such as fax machines, telephones, answering

machines, executive phones, switch boards, cordless phones, typewriters and ordinary

phones. "

SERVICE QUALITY

The continuing concerns expressed by users focused mainly on the availability of service and

the degree of service reliability and congestion in rural areas; specific local problems in the

Nairobi industrial area (where a large amount of industrial activity takes place) and the Jomo

Kenyatta Airport area outside Nairobi; delays and unpredictability in the installation of new

exchange lines and leased lines; and delays in repairing faults.

In the Nairobi industrial area, network congestion was still severe at the time of our program

of interview fieldwork in Kenya in 1991. This has continued to be a concern for some

companies located in this area.

the telecommunications picture in Kenya is one of significant but uneven improvement in

service quality, with the most extreme problems of service interruption being overcome in

most locations (with important exceptions) and congestion, slow installation, and repair as

continuing concerns. It is indicative of the significance of these problems that

telecommunications difficulties figured prominently in the controversy in the early 1990s over

an (unsuccessful) proposal to relocate the world headquarters of the United Nations

Environment Program (UNEP) from Nairobi to Geneva.
http://www.monier2000.com/http://www.telebell.co.ke/http://www.telebell.co.ke/http://www.telebell.co.ke/http://www.monier2000.com/


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INDIAN TELECOM

OVERVIEW

The Indian Telecommunications network is the third largest in the world and the second

largest among the emerging economies of Asia. Today, it is the fastest growing market in the

world. The telecommunication sector continued to register significant success during the year

and has emerged as one of the key sectors responsible for Indias resurgent Indias

economic growth.

GROWTH & DEVELOPMENT

This rapid growth has been possible due to various proactive and positive decisions of the

Government and contribution of both by the public and the private sector. The rapid strides in

the telecom sector have been facilitated by liberal policies of the Government that provide

easy market access for telecom equipment and a fair regulatory framework for offering

telecom services to the Indian consumers at affordable prices.

GSM SECTOR

In terms of the Global System for Mobile Communication (GSM) subscriber base this now

places India third after China and Russia. China had 401.7 million GSM subscribers.

CDMA SERVICES

CDMA technology was introduced in India as a limited mobility solution. The introduction of

CDMA services has created competition, lowered tariffs and offered many citizens access to

communication services for the first time.


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MARKET PLAYERS IN INDUSTRY

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)

Private Indian owned companies (Reliance telecomm, Tata Teleservices)

Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea

Cellular, BPL Mobile, and Spice Communications)

Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over

200,000 employees and more than 2.3 million shareholders. Tata Teleservices bouquet of

telephony services includes Mobile services, Wireless Desktop Phones, Public Booth

Telephony and Wire line services. Other services include value added services like voice

portal, roaming, post-paid Internet services, 3-way conferencing, group calling, Wi-Fi Internet,

USB Modem, data cards, calling card services and enterprise services.

Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in

1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai.

Vodafone Essar now has operations in 16 circles covering 86% of India's mobile customer

base, with over 45.78 million customers. Vodafone Essar, under the Hutch brand, has been

named the 'Most Respected Telecom Company', the 'Best Mobile Service in the country' and

the 'Most Creative and Most Effective Advertiser of the Year'.

Idea Cellular is part of the Aditya Birla Group, which is India's first truly multinational

corporation. Aditya Birla Nuvo Ltd. holds 35.7 per cent, Birla TMT Holdings Ltd. 44.9 per cent,

Grasim 7.5 per cent, and Hindalco 10.1 per cent in Idea.

Reliance Telecom's cellular services are available in 340 towns within its eight-circle footprint.Reliance Infocomm also offered for the first time in India, mobile data services through its


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RWorld mobile portal. This portal leverages the data capability of the CDMA 1X network.

Reliance Infocomm offers a complete range of telecom services covering mobile and fixed line

telephony including broadband, national and international long distance services, data

services and a wide range of value added services and applications aimed at enhancing

productivity of enterprises and individuals.

Bharat Sanchar Nigam Ltd. is World's 7th largest Telecommunications Company providing

comprehensive range of telecom services in India: Wire line, CDMA mobile, GSM Mobile,

Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN Services etc.

Within a span of five years it has become one of the largest public sector units in India.


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COMPARISON OF TELECOM SECTOR OF

KENYA WITH INDIA


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TELEPHONES - MOBILE CELLULAR

This entry gives the total number of mobile cellular telephone subscribers.

1998 2000 2003 2006

India 1,900,000 2,930,000 26,154,400 69,193,000

Kenya 6,000 540,000 1,590,800 6,500,000

2008 2009 2010

India 96,080,000 62,300,000 52,000,000

Kenya 11,440,000 4,969,000 5,965,000

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

1998 2000 2003 2006 2008 2009 2010

India

Kenya


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TELEPHONES - MAIN LINES IN USE

This entry gives the total number of main telephone lines in use.

1999 2000 2003 2005

India 18,950,000 27,700,000 48,917,000 49,750,000

Kenya 290,000 310,000 328,400 281,800

2008 2009 2010

India 38,760,000 37,750,000 35,090,000

Kenya 264,800 460,100 840,340

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1999 2000 2003 2005 2008 2009 2010

India

Kenya


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TELEPHONES - MAIN LINES IN USE PER CAPITA

This entry gives the estimated number of fixed telephone lines per 100 people.

2000 2003 2005

India 2.73 4.66 4.61

Kenya 1.01 1.04 0.83

2008 2009 2010

India 3.38 3.24 2.99

Kenya 0.72 1.18 2.30

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2000 2003 2005 2008 2009 2010

India

Kenya


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TELEPHONES - MOBILE CELLULAR PER CAPITA

This entry gives the estimated number of mobile phone lines per 100 people. It is also known

as the mobile phone penetration rate.

2001 2003 2005

India 0.29 2.49 6.32

Kenya 1.76 5.03 13.63

2006 2007 2009

India25.79 31.07 64.1

Kenya 18.73 30.99 64.02

0

10

20

30

40

50

60

70

2001 2003 2005 2006 2007 2009

India

Kenya


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INTERNET HOSTS

This entry lists the number of Internet hosts available within a country. An Internet host is a

computer connected directly to the Internet; normally an Internet Service Provider's (ISP)

computer is a host. Internet users may use either a hard-wired terminal, at an institution with

a mainframe computer connected directly to the Internet, or may connect remotely by way of

a modem via telephone line, cable, or satellite to the Internet Service Provider's hostcomputer. The number of hosts is one indicator of the extent of Internet connectivity.

2003 2005 2006 2008 2010

India 86,871 787,543 1,543,000 2,707,000 6,738,000

Kenya 8,325 11,645 13,274 27,376 69,914

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2003 2005 2006 2008 2010

India

Kenya


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INTERNET USERS

This entry gives the number of users within a country that access the Internet. Statistics vary

from country to country and may include users who access the Internet at least several

times a week to those who access it only once within a period of several months.

2000 2002 2003 2005

India 4,500,000 7,000,000 18,481,000 60,000,000

Kenya 45,000 400,000530000

1,055,000

2007 2008 2009

India 80,000,000 81,000,000 61,338,000

Kenya 3,000,000 3,360,000 3,996,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

2000 2002 2003 2005 2007 2008 2009

India

Kenya


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AFFECTED FACTORS OF KENYA TELECOM

In order to respond to today's dynamic business nature many firms have implemented

enterprise resource planning (ERP) systems. ERP can be defined as a large - scale

information system that integrates all business functions into one unified function.

Companies are realizing that they have to implement ERP in order to remain competitive.

This research project sought to identify and understand the factors affecting such

implementation in Telecommunication firms in Kenya, focusing on a case of Telkom Kenya.


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Present Position and Trend of Business

Accordingly, the Department of Telecom has been formulating developmental policies for the

accelerated growth of the telecommunication services. The Department is also responsible

for grant of licenses for various telecom services like Unified Access Service Internet and

VSAT service. The Department is also responsible for frequency management in the field of

radio communication in close coordination with the international bodies. It also enforces

wireless regulatory measures by monitoring wireless transmission of all users in the country.

The present telephone density in India is about 0.8 per hundred persons as against the world

average of 10 per hundred persons. It is also lower than that of many developing countries of

Asia like China (1.7), Pakistan (2), Malaysia (13) etc. There are about 8 million lines with a

waiting list of about 2.5 million. Nearly 1.4 lakh villages, out of a total of 5, 76,490 villages in

the country, are covered by telephone services. There are more than 1 lakh public call offices

in the urban areas.

The Sixth Session of the Kenya-India Joint Trade Committee (JTC) Meeting was held in

Nairobi on 12th and 13th October 2010, in accordance with Article X of the Trade Agreement

signed between the Republic of Kenya and the Republic of India on 24thFebruary 1981 in

New Delhi. Article 10.1 of the Bilateral Trade Agreement provides for continuous review of

the implementation of the provisions of the Bilateral Trade Agreement, examination

of measures for the solutions of problems which arise or may arise in the implementation of


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this Agreement or in the course of development of trade between the two countries and

consideration of proposals made by either Contracting Party within the frame-work of this

Agreement aimed at further expansion and diversification of trade between the two countries.

The volume of bilateral trade has shown remarkable growth since 2005-06. Bilateral Trade

has grown from US $ 625 million in the year 2005-06 to US $ 1,530 million in 2009-10,

registering a growth of 145 % in the last 4 years. Indias exports to Kenya have increasedfrom US $ 576 million in 2005 - 2006 to US $ 1,452 million in 2009- 2010. Similarly, Indias

imports from Kenya also rose from US $ 48 million in 2005 -06 to US $ 79 million in 2009-

2010. There is tremendous potential for further diversifying and expanding the bilateral trade

between both countries.

India requested Kenya for early implementation of the pan Africa e-network.

The ICT Board signed the Country Agreement with TCIL on 21st July 2010.

The ICT Board was requested to identify site locations so that the pre installation and

feasibility studies could be carried out by TCIL. Indian side also extended cooperation in

training of Kenyan personnel in the Advanced Level of Telecom Training Centre (ALTTC)

Ghaziabad and the Centre of Excellence in Telecom Technology and Management Mumbai.

Cooperation was also extended in the fields of setting up e governance infrastructure, ICT

services related to telecom operation support, and information call centers in agriculture

sector.

Kenya side said that the site will have been identified by end of October 2010. The national

coordinator has already been identified and the contact details will be conveyed. All the

equipment has been received and cleared by Kenya ICT Board. The equipment will be

dispatched to the identified sites for installation. ICT Board will cooperate with TCIL in

establishing a call center for the agricultural sector to revolutionalize flow of information

benefitting farmers immensely and also creating a database for other organizations.

Kenya had initiated an MOU for cooperation in some of the areas discussed during the5th JTC. The Indian side will respond so as to fast track implementation especially in areas

of capacity building.


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POLICIES AND NORMS OF KENYA FOR TELECOM SECTOR

The Communications Commission of Kenya (CCK) is responsible for licensing

telecommunications operators. The Ministers responsibilities are limited to setting broad

policy objectives, which the CCK must take into consideration when awarding new licenses.

In issuing licenses, the paramount consideration is the provision of telecommunication

services to satisfy public demand. A board directs the affairs of CCK.

The board comprises:

A chairman appointed by the President

A Director General appointed by the minister responsible for telecommunications

Four permanent secretaries representing telecommunications, finance, internal

security, and broadcasting

At least five other persons not being public officers, appointed by the minister by virtue

of their expertise on matters of interest to CCK

There is unlimited discretion on the appointment of the members, whose terms of

appointment are set out in an individual letter of appointment. The government will continue

to have a controlling ownership of TKL and it is the duty of the Ministry of Finance

representative in the CCK to safe-guard that interest. Government ownership of the dominantplayer in the sector may be viewed to be in conflict with independence in decision-making in

actions against the commercial interest of TKL.

Additionally, if the past is a guide, it is likely that the representatives for the Ministry of

Telecommunications and Finance will be board members of TKL. Viewed against the WTO

Reference Paper, the regulator may be perceived to be closely linked with the TKL and

therefore fail to conform to the principles of the Reference Paper.

Already TKL and the CCK share one board member, which in essence compromises the

independence of the regulator.

The CCK has already weathered its first storm in the pre-qualification of six bidders out of 26

applicants for the second mobile operator license, in which several parties lodged complaints

for disqualification of certain applicants.

However, in awarding the second license, the CCK exhibited what has been widely

acclaimed as transparency by choosing a technically sound tender over another financiallyattractive tender. Vivendi Telecom bid US$55 million for rollout of 582 700 lines in five years


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against Orascoms bid of US$93 million for an undisclosed number of lines. Orascom was

disqualified on the grounds that its consortium details kept changing, including the withdrawal

of GTE (USA) from the partnership.

The Status Of Telecom In Kenya

Status in 1994

0.8% teledensity far below world average of 10% and other

Total phones: 8 mn with a waiting list of 2.5 mn.

Below 25% villages (1.7 lakhs) covered.

National Telecom Policy 1994 Announced.

Telecom a national priority for increased economic development.

Plan targets revised to have telephone on demand and all villages covered.

All services available internationally to be available in India by 1996.

Value-added services opened in 1992 (cellular mobile, radio paging, email, etc.)

Resource gap of Rs 23,000 cr to meet the revised targets necessitated private sector

participation.

Tendering process for selection of private players for Basic and Cellular services.

The First Phase Of Reforms In Telecom In India Leading To Privatization

Licenses awarded (in 1995-97) after tendering and bidding process:

8 GSM licenses in 4 metros (no bidding beauty parade).

34 GSM licenses in 18 state circles

6 Basic Service Licenses in 6 state circles

Results not satisfactory due to:

Actual revenue realizations far short of projections leading to operators being unable to

arrange finance for their projects and complete rollouts.

Government appreciates the concern of the operators and allows for mid-course corrections.

Challenges And Growth Of Indian Telecom Sector

India has emerged as one of the youngest and fastest growing economies in the world today.

One of the sectors that has shown the signs of profitability and contributed significantly to the

country's economy is the telecom industry. In fact, the Indian telecom market has gained

recognition as one of the most lucrative markets globally.


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The vast rural market holds a huge potential to drive the future growth of the telecom

companies. Further, the government's initiatives for increasing the telecom connectivity in

rural areas are also likely to aid the telecom service providers to extend their services in the

unconnected rural areas. The Indian Telecommunications network with 621 million

connections (as on March 2010) is the third largest in the world. The sector is growing at aspeed of 45% during the recent years

This rapid growth is possible due to various proactive and positive decisions of the

Government and contribution of both by the public and the private sectors. The rapid strides

in the telecom sector have been facilitated by liberal policies of the Government that provides

easy market access for telecom equipment and a fair regulatory framework for offering

telecom services to the Indian consumers at affordable prices. Presently, all the telecom

services have been opened for private participation. The paper examines the changing

landscape of telecom sector in the terms of challenges and opportunities.

The Indian mobile subscriber base is likely to sustain the rapid growth recorded in the past

few years. Presence of skilled labor pool, improving telecom infrastructure, favorable


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demographics, rising disposable incomes of consumers, declining tariffs, increasing demand,

growing attraction for mobiles with new features and greater availability of handsets at lower

prices, are expected to continue driving the growth of the telecom sector, going forward.

The growth of India as a knowledge based economy will not be possible without the growth

and expansion of the Indian telecommunications and IT sectors. This symbiotic relationship is

not lost on the government which has attempted to back the telecommunications sector byfostering an encouraging regulatory scenario. This has not only helped the

telecommunications sector to evolve in a dynamic manner but has enabled it to attract

foreign investments.

Telecom spectrum is a scarce resource and with so many scams happening right under the

governments nose, it is no surprise that the situation looks quite grim. But despite all the

hiccups, the future is fresh with promise as each day; the mobile is finding more acceptances

and becoming an inevitable part of our lives. Perhaps, that is a single shimmer of hope that iskeeping the sector going. The area which needs immediate attention is the need for flexibility

in the regulatory mechanism. The telecom legislation at present seems to be archaic laws

and the need of the industry right now is a mechanism that can continuously adapt itself to

the changing needs of the industry. There is no doubt at all that the coming years are going

to be exciting years for the Indian telecom sector.


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GOVERNMENT POLICY ON ICT SECTOR

The Government of Kenya has embarked on a series of initiatives to revitalize and transform

the economy into a modern market-oriented one. The aim is to improve the economic well

being of Kenyans by establishing Kenya, in the medium term, as the centre of industrial and

financial activities in the region.

The sector policies aim to define the framework within which telecommunications and postal

services will be provided. The overall Government objective for the sector is to optimize its

contribution to the development of the Kenyan economy as a whole by ensuring the

availability of efficient, reliable and affordable communication services throughout the

country.

The primary motivation for growth in ICT has come from the private sector, with the role of

governments being that of a facilitator for creating an enabling environment. The challenges

to incorporate ICT in various aspects of economic development centers on five major areas

are:

Support to small and medium business

Education

attracting high tech industry

Access to technology infrastructure

Business friendly government

Industry structure

One of the immediate goals of the telecommunications sector reform was to increase

telecommunication supply. The immediate result of the reform has been witnessed in high

growth in all areas that were open for competition. Low growth was noted in the areas without

competition notably in the provision of fixed line services. Competition no doubt released

resources from the private sector to serve the demand that could not be served under a

monopoly environment.

The Communication Commission of Kenya (CCK) reviewed and segmented the

telecommunication sector market into various service streams that are licensed separately

as:

Facility based public fixed telecommunication service

Land mobile radio communication service (type 2 carrier)

Fixed and mobile satellite services

Facility based data communications networks and services

Internet facilities and services and


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Value added services (VAS)

RECENT POLICY CHANGES IN INDIA AND THEIR IMPACT

The government had initiated policy changes largely in the following areas:

Restructuring the sector

Increased investments

Technology development and transfer

Service provision

The objective was to provide accelerated growth in infrastructure and services, improve

customer service, provide autonomy and flexibility within the sector to expedite growth, raise

finances from the public, and provide an effective regulatory and policy environment. In the

following we attempt to review the policy changes, assess the impact, and suggest directions

for improvement.

Business Opportunities in future

There is currently no significant export of ICT products and services. However there are

several start-ups who have successfully tapped into the outsourcing industry, primarily call

centers, business process and data entry, and this area seems to have great potential for

growth in the medium and long term. Mecer, a South African computer manufacturer, has set

up its regional assembly plant of desktop computers in Kenya. This plant exports 50 per cent

of its output to other countries in the greater East African region. Finally a lot of imported ICT

equipment, especially mobile phone handsets, is re-exported to the neighboring countries

however with no value addition taking place in Kenya.

Political risk

There are no perceived political risks in the ICT industry in Kenya. The current government

and any likely future governments are bound to value to potential ICT brings to the private

and public sectors. Besides developing the 2006 Kenya ICT Strategy and pushing for the

implementation of the ICT act, the government has committed itself to digitize its operations

by 2008, e.g.

Making forms and other paperwork available online, and thus accessible at any web caf or

office with Internet connection throughout the country.


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BUSINESS OPPORTUNITIES


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Business Opportunities in future

As a regional hub and a financial capital of the East and Central Africa region, Kenyas

competitive advantage as an ICT investment destination is supported by various investor

friendly factors that include:

Regulatory framework

The establishment of Communications Commission of Kenya (CCK) as the regulatory body

provides an investor with a one-stop body for registration and facilitation thus reducing

bureaucracy. The regulation of the sector and granting of licenses remain the responsibility of

CCK.

Availability of a well-trained labor force

Kenya has a well-trained English speaking labor force with skilled personnel trained in ICT

and related fields. ICT and computer learning is currently offered at both secondary school

level and in universities and tertiary institutions in the country. Wages in Kenya are generally

reasonable and this extends to the ICT sector.

Kenyas relation with the global information infrastructure

Kenya is an active member of the International Telecommunications Union, ITU. Kenya is

also a participant and a signatory to a number of international conventions and standards

relating to ICT.

Diversified experience

Kenyans are involved in virtually all areas of ICT. Whether in telecommunications, hardware

components, software, or Internet service provision, Kenya has a well-established group of

companies involved in all of these areas.

Access to the regional market

Kenyas membership in regional trading bodies such as COMESA, African Union and the

East African community provides potential investors with a large potential market for their

products and services.

The Kenya government can guarantee investor friendly arrangements such as:

The Export Processing Zones (EPZ) program which offers attractive incentives to export-

oriented investors

Kenya Investment Authority to promote all other investment in Kenya including inManufacturing under Bond (MUB) program


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The Tax Remission for Export Office (TREO), a program for intermittent imports for export

production

Generous investment and capital allowances

Double taxation, bilateral investment and trade agreements

The liberalization policy allowing for private sector participation in the ICT sector

Reduced taxes on computer hardware and software (zero rating of import duties on PCs)

Removal of licensing requirements on information and broadcasting services


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CONCLUSIONS

India has begun a process of telecom reform without any coherent long term plan. For the

benefits to be available to the economy a number of actions would have to be taken, viz.,

separation of policy and operation, corporatization of at least some divisions of telecom

service, and implementation of a long term training policy and monitoring systems to ensure

fair access to the network. Ad-hoc nature of the reform process would lead to minimalbenefits and at times may be dysfunctional. The speed of implementation of reforms needs to

be accelerated. Implementation of many of these suggested measures may require strong

political will and a concerted effort. This paper highlights the role of political will and

employees concerns in implementing reforms and the need for top management in

addressing them. A well laid out plan for reform is likely to bring greater success and remove

uncertainty from investors and employees and bring in support for the reform process.

Indian telecom industry continued to register significant growth in 2008-09. Indian Telecom

network with about 414 million connections in February 2009 is the third Largest in the world,

while it is credited with the second largest wireless network in the World (see below section

on Mobile Telephony for details). At the current pace, the target of 500 million connections by

2010 is well within reach. The Government of India has reiterated its commitment to reach

out to remote and uncovered areas and to augment broadband facilities in rural areas.

The total number of telephone increased from 76.53 million by end-March 2004 to 413.85

million by end-February 2009. About 113.36 million telephones, at the rate of more than 14

million subscribers every month were added during 11 months of 2008 09. The total tele-

density increased from 12.7% in March 2008 to 35.65 per cent in February 2009. While rural

tele-density reached 13.81 % in January 2009, the urban tele-density shot up to 83.66%.


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Bibliography


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