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Airtel Kenya to roll out 3G Internet technology

Airtel, which offers data services through a lower version, says the launch of 3G technology will enable it to offer clients high speed Internet. Fredrick Onyango
Airtel, which offers data services through a lower version, says the launch of 3G technology will enable it to offer clients high speed Internet. Fredrick Onyango 

Airtel Kenya will unveil the 3G mobile Internet technology in September.

Managing director Rene Meza said the firm will complete technical and billing tests in Nairobi and Mombasa in the next two months, setting the stage for the launch that is expected to offer consumers more choices on the segment.

Airtel, which offers data services through a lower version, Wednesday said the launch of 3G technology will enable it to offer its clients high speed Internet. At the moment, only Safaricom offers this kind of technology in the country. Telkom’s Kenya’s Orange is also carrying out technical tests but is yet to announce when it will make the service available to its end users. “We are set to launch in September and promise our clients faster and better quality on mobile Internet access” said Mr Meza.

Airtel Kenya, which has adopted a low, mass market, pricing strategy on the voice segment said dynamics in the data market will dictate costing.

Eroding profitability

Analysts see data and value added services, such as money transfer, as the next revenue growth for mobile firms. Stiff competition in the voice market has led to tariff reduction by more than 50 per cent since last August, eroding profitability.
Industry regulators’ latest statistics indicate that more people can now access the Internet via mobile phones with Safaricom, which offers 3G services, controlling the market. The firm controls 92 per cent of marketshare, with 3.7 million subscribers, followed by Airtel with 4.6 per cent amounting to 680,494 subscribers, while Orange has 2.4 per cent share equivalent to 82,697 clients.

The 3G technology allows an operator to offer mobile Internet access, mobile video conferencing, and videophone.

Corporate organisations whose employees work in the field are one of the key targets. The wireless technology makes it easy for one to access Internet in rural areas where Internet service providers have been shy to take their services.

In 2009, the Communication Commission of Kenya lowered 3G frequency fees to $10 million, from the previous $25 million that Safaricom paid in 2007.

Stiff competition

Analyst Vincent Mutavi said Airtel’s entry into the 3G segment will lead to stiff competition for data enabled devices. This will create more market for vendors, leading to a shift in billing of the data to bandwidth as opposed to one being charged as long as they log on to the Internet.

“We expect to see Airtel Kenya adopt some of the strategies its parent company has used such as streaming appealing content to their subscribers to drive usage,” said Mr Mutavi.

He said that “If you look at Airtel’s strategy, they are using the low pricing model to get numbers then data as the killer application to generate revenue, this is what we are likely to see.”

Analysts said the company’s delay to launch the service could have been well planned, to allow it acquire more subscribers through the mobile number portability exercise that begun in April.

In January, Airtel Kenya had indicated that it would to launch the service in April but later pushed the date to September citing change of supplier of the equipment.

Leading beneficiary

Figures released by Porting Access, the firm managing the mobile number portability process, in May indicted that Airtel was the leading beneficiary of subscribers willing to switch networks. According to data released by the firm then, out of the 40,000 subscribers who had initiated the process to switch networks 50 per cent were heading to Airtel.

The firm, however, is expected to run into stiff competition from Safaricom which is currently carrying out trials on the long term evolution of the 4G technology.

The upgrade to the current third generation technology (3G) is poised to offer faster mobile Internet access.
The firm excepts that once the 4G technology becomes operational, its customers will enjoy high speeds of up to 600 megabits per second or 1.5 gigabits per second in both downloads and uploads.

The new technology will enable Safaricom to deliver a combination of services that include data, voice, and video and download services like iTunes which will be billed through a different charging system. Earlier, Global Telecoms Business named Mr Meza among the top 40 under 40 global telecommunication leaders.

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