A price war has characterised Kenya’s mobile communications sector in recent years, following the market entry of the third and fourth network. This has led to accelerated subscriber growth, but it has also presented challenges to the profitability of the operators, forcing them to streamline their operations and develop new revenue streams in an environment of falling average revenue per user (ARPU) in the voice market. Third generation (3G) mobile broadband services as well as mobile payment and banking services are delivering these additional revenues, but all service segments are highly competitive. For fourth generation (4G/LTE) technology, the Kenyan government is following a unique open-access approach with plans to licence a multi-facetted consortium to operate the network.
Price war is threatening profitability; Market consolidation, mergers and acquisitions possible; Mobile banking revenue outstrips SMS and 3G mobile broadband; Unique open-access approach to licensing 4G/LTE network.
Companies covered in this report:
Safaricom (Vodafone); Bharti Airtel (formerly Zain, Celtel); Essar Telecom Kenya (Yu, formerly Econet); Telkom Kenya (Orange, France Telecom); Huawei Technologies; ZTE; Alcatel-Lucent; Nokia Siemens Networks (NSN).