Safaricom suffers setback in plan for own 4G link

Safaricom plans to roll out its own 4G network has suffered a major setback after the communication regulator maintained that it has no frequencies to offer the mobile telecom firm.

The Communications Commission of Kenya is now asking Safaricom to create space within its current frequencies for the 4G network — a position the firm reckons will cost more.

“In all the bands that Safaricom has applied, the frequencies were not available since they are being occupied by other services,” said CCK in a statement.

“CCK has already advised Safaricom to re-farm (if they wish) all or part of their already assigned spectrum.”

Re-farming means creating space within the existing frequencies to widen a telco’s product offering.

But Mr Bob Collymore, the Safaricom CEO, says that deploying the 4G network within existing frequencies will be more expensive since it will require many transmitters.

“We have deployed ten 4G sites in Nairobi and Mombasa on our existing frequency band; however, it is expensive to rollout a national network because it covers a limited radius,” said Mr Collymore.

“That is why we wrote to the ICT Ministry seeking to be allocated frequencies on 700 megahertz band which covers a wider area and as such reduces expenses for construction and maintenance of base stations,”

The government had plans to roll out a national 4G network to be shared by all the operators, and the State is keen to have Safaricom participate in the joint venture rather than go it alone.

READ: 4G joint venture suffers setback as Safaricom pulls out

Safaricom reckons that the State is taking long to secure shareholder agreements as it gears up to meet growing demand for fast connections by users of tablet computers and smartphones and boost its network quality.

The 4G ownership structure is modelled on a public-private partnership, where the government and the operators — including foreign firms — will own stakes equivalent to the capital they inject in the special purpose entity.

“We have not received any communication from the ministry on our request but it seems the government is hell-bent on deploying the 4G through a consortium so as to retain some ownership in it,” says Mr Collymore.

This will delay Safaricom’s plan to upgrade its network to 4G — which supports high-speed wireless services.

Its network has been struggling with fluctuating data speeds and dropped calls, a move that has seen CCK declare it a non-compliant operator on quality of service.

Safaricom also expects a surge in demand for data services, thanks to an explosion of Internet-ready hand-held devices like tablet computers and smartphones and an increase in applications and content.

The mobile phone firm is also preparing to enter the television market by the end of next year, an investment that requires a network upgrade.

These explain Safaricom’s drive to upgrade and recent acquisition of Yu’s stake in the undersea fibre optic The East Africa Marine system (TEAMs).

The Yu deal pushed Safaricom’s ownership in the fibre optic network to 32.5 per cent, a share that guarantees the operator additional capacity in TEAMs.

Business opportunity

The planned exit of Safaricom will deal a blow to the promoters of the national 4G network because it is one of the few firms among those that have expressed interest in the joint venture that have the capital and need for the network.

Other operators that expressed interest in the joint venture are Airtel, Orange, MTN Business, Liquid Telecoms and Essar Kenya.

Its implementation was expected to provide a business opportunity for hardware vendors such as Ericsson, Huawei and Alcatel-Lucent.

Essar, which operates on 2G, has also expressed frustration at the slow pace in reaching a deal on the joint venture and has revised its plans to invest in a 3G network instead.

The firm, which owns the yu brand, was not keen on investing in 3G and planned to upgrade to the government-led 4G network to cut on licence fees that stands at about $25 million (Sh2.1 billion) and capex.

Many operators in Africa are only rolling out 3G, but multinationals are already testing 4G in several markets.

African telecom giants MTN and Vodacom are running trials in South Africa and Safaricom has also tested the technology as it races to upgrade and meet regulatory benchmarks.

The CCK has said that Safaricom and Airtel did not meet minimum quality of service standards in the year to June but declared rivals,Telkom Kenya and Essar compliant.