Companies rush to lease KPLC’s over-the-power-line cable

Information and telecommunication (IT) firms are rushing to secure a lease of Kenya Power and Lighting Company (KPLC) fibre, as an assurance to offer round-the-clock connectivity which is becoming a key selling factor.

Unlike the terrestrial fibre optic cables, the-over-the-power-line fibre is not prone to vandalism and also eliminates costs associated with repairs or providing security to the underground cables.

For instance, Telkom Kenya says it spends an average of Sh500,000 per incident of vandalism.

The scramble has seen four big operators, Jamii Telecommunication Ltd, Safaricom Ltd and Wananchi Group and latest Kenya Data Network (KDN) sign agreements with KPLC to lease capacity.

The four companies, together with KPLC have already taken up more than half of the available capacity, leaving 14 other firms who are still lined up to get a share of the remaining capacity.

Failure to secure capacity directly will mean that interested companies purchase capacity from the operators who have bought huge volumes at higher prices to cater for the mark ups by the operators.

AccessKenya, for example, has bought capacity with Jamii Telecoms Ltd for redundancy purposes.

Out of the 24 pairs of fibres in the cable, the power firm will only utilise six pairs of fibre for its operations data and speech communications on a day-to-day basis.

The KPLC over-power-line cables system is seen as a solution to the cable vandalism that has been witnessed in the sector.

Cables theft has not only resulted into interrupted business operations, but also increased maintenance and other costs such as providing security along the terrestrial cable lines.

KDN, on Thursday, signed a five-year agreement to lease one pair of dark fibres on the KPLC fibre optic network on the Nairobi-Mombasa power transmission line for an annual fee of Sh27 million.

This follows an earlier agreement by Safaricom which signed up for a pair of the fibres in a 20-year lease on the Nairobi-Mombasa line for Sh288 million, while Wananchi group and Jamii Telecommunications Ltd, in a five-year renewable lease of one pair of fibres each, will pay Sh27 million per year.

KDN chief executive officer, Mr. Kai Wulff, said that the partnership with KPLC will offer an alternative route for data traffic that is now going through the existing fibre cables buried in the ground.

This will provide better uptime on the Internet and corporate wide area networks for not just Kenya, but also for the neighbouring countries.

“Vandalism that has occasioned a few outages on KDN client’s networks will be a thing of the past with this partnership,” said Mr. Wulff. “Our customers can now enjoy better uptime on their network as we continue to improve on the redundancy of our terrestrial fibre optic network.”

KPLC managing director, Joseph Njoroge, said during the five-year lease of the pair of fibres, the company will earn Sh135 million.

In the Safaricom, Jamii telecoms and Wananchi group deal was worth Sh558 million.

Mr Njoroge said KPLC would leverage this investment by offering extra capacity on it to private sector on commercial basis to diversify its revenue base.

“We see enormous potential for diversifying our revenue base and enhancing our bottom line, as well as increasing shareholder value by maximising utilisation of this major and secure national resource.

He noted that the quality of communication channelled through the KPLC fibre optic cable was of world class standard; adding firms already using it had confirmed it had met and exceed their expectations.

KPLC was granted a Network Facility Provider- Tier 2 licence by the Communications Commission of Kenya last year.

The licence gave the Company authority to construct, install and operate electronic communication systems, which may be leased to licensed telecommunications operators.

The fibre optic cable installation was a component of a larger sh1.9 billion System Control and Data Acquisition (SCADA) system modernisation.

The SCADA system is used for the effective and efficient management of operations of KPLC’s nationwide power transmission and distribution grid.

Installation of the fibre optic cable on the 500 km Nairobi-Mombasa route was completed last year, while installation of the cable on the western route and on other transmission lines is expected to be complete and available for use by July this year.

The cable network covers routes from Kipevu in Mombasa to Nairobi and from Nairobi to parts of the Mount Kenya Region to Eldoret and Eldoret through to, Muhoroni, Kisii and ultimately to Tororo in Uganda.

All the routes will be ready for use by June 2010.