Safaricom 4G rollout on course after yu assets transfer

Safaricom’s rollout of its high-speed 4G network got a boost last week after it completed the transfer of yuMobile’s assets, including additional frequencies it needed to launch the service in other parts of the country.

Safaricom and Airtel completed the buyout of yuMobile assets in September, but Safaricom had to wait for yuMobile to transfer its 2.5 million subscribers to Airtel before taking over the exiting Indian operator’s frequencies.

Safaricom is using the additional frequencies to, among other things, increase its 4G network footprint whose rollout began in Nairobi and Mombasa early this month.

It also intends to use the additional spectrum to improve the quality of services on its network including a reduction in the number of dropped calls.

Airtel, which took over yuMobile’s customers, got a boost to its subscriber base that now stands at five million, well behind Safaricom’s 21 million.

“Transfer of the frequency spectrum has been concluded. We plan to use this extra capacity to increase the LTE presence and boost the quality of the network in some areas,” Mr Nzioka Waita, director corporate affairs at Safaricom, said.

Deployment of a commercial 4G long term evolution (LTE) network is expected to give Safaricom a first-to-market advantage over its two rivals, Airtel and Telkom Kenya (Orange), especially in the fast-growing wireless data market segment.

READ: Safaricom races ahead of rivals with 4G network

Madhur Taneja, the yuMobile country manager, said there would be no tariff changes for its subscribers who have been transferred to Airtel.

“The subscribers will continue to enjoy the services under the current tariffs and under the yuMobile brand. No changes are expected soon in regard to the tariff plans for voice, data and mobile money transfer,” Mr Taneja said. 

In addition to the frequency spectrums acquired from the yuMobile, Safaricom has paid $75 million (Sh6.8 billion) to the Communications Authority of Kenya (CA), for the award of more frequencies that will enable it to deploy new sites to cover 15 towns before ultimately taking its footprint across the country.

A 4G network gives Safaricom the ability to provide its own advanced data services to a lucrative market that is currently served by fibre-to-home providers like Jamii Telecoms (Faiba) and Wananchi Group (Zuku).

In addition to voice and other 3G mobile services, a 4G system provides broadband Internet access to smartphones, laptops with wireless modems and other handheld devices.

Potential services include faster mobile web access, IP telephony, gaming, high-definition mobile TV, video streaming and conferencing, 3D television and cloud computing.

yuMobile, which entered Kenya in 2008, is exiting after failing to recoup its investment in the competitive mobile market Telkom Kenya, which is majority-owned by France Telecom, is the fourth operator in the market with 7.7 per cent of users.

Airtel has committed to continue using the yuMobile brand for the next two years, and in the event that it wants to fully own the brand, pay Essar more money.

“Airtel will be the first mobile operator to run two brands in one market. This is mainly driven by the fact that the yuMobile brand is specially associated with the youth, a factor that Airtel is said it does not want to lose,” Mr Taneja said. 

Safaricom and Airtel are also absorbing 175 of exiting yuMobile employees, with the leading mobile provider, taking 150 yuMobile employees and Airtel 25.

yuMobile, which is owned by Indian conglomerate Essar, has 197 employees excluding the expatriates, meaning 22 employees will not be absorbed in the arrangement and will have to be paid off.

The exit of yuMobile now reduces the number of mobile operators to three, withTelkom Kenya majority shareholders, France Telecoms also said to be looking for a buyer of its stake in the Kenyan firm.

Essar entered the Kenyan market after it bought an operating licence from Econet Wireless International – a company owned by Zimbabwean tycoon Strive Masiyiwa. The deal initially gave the Indian telecom firm a 35 per cent stake but that grew gradually to 70 per cent.

It later acquired an additional 10 per cent stake following a dilution of local shareholders’ stake in the wake of their failure to contribute funds required for the company’s growth.

In 2012, Essar bought out the remaining shares held by the local owners after they failed to inject capital into the company.