Safaricom races ahead of rivals with 4G network

Safaricom is betting big on the home internet market segment with the launch of an advanced fourth generation (4G) long term evolution technology to drive its data services.

The integrated telecoms services provider Thursday launched a high-speed wireless Internet network that is initially available on Mombasa Island and in parts of Nairobi such as Gigiri, Runda, Buru Buru, Parklands and Kabete.

The network gives Safaricom the ability to provide its own advanced data services to an affluent market currently being served by fibre-to-home providers like Jamii Telecommunications (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 applications include faster mobile web access, IP telephony, gaming services, high-definition mobile TV, video streaming and conferencing, 3D television and cloud computing.

“The launch… will give us a chance to deliver broadband internet to homes, which currently we cannot do with the 3G (network),” Safaricom’s CEO Bob Collymore told Business Daily at the launch on Thursday.

He said the cost of accessing 4G internet would remain the same as with 3G. However, interested subscribers will have to replace their current SIM cards at a cost of Sh50 and, if necessary, invest in a 4G or LTE-enabled device.

LTE, or long term evolution, is a standard for wireless communication of high-speed data for mobile phones.

Mr Collymore explained that the current deployment of 4G had been achieved by upgrading some of its 3G sites.

However, he added that the firm paid $75 million (Sh6.8 billion) to the Communications Authority of Kenya (CA), for more frequency spectrum to enable it deploy new sites to cover 15 towns and, eventually, across the country.

“We have already paid $75 million to the regulator to acquire frequency in the 800 megahertz band, which they are yet to allocate us,” Mr Collymore added.

“We are expecting to be allocated the 2 x 15MHz (frequencies), which is the capacity currently available now. Thereafter we will get another set."

The launch of the 4G technology comes on the heels of last week’s signing of a Sh14.9 billion national security communication contract between Safaricom and the National Treasury.

Under the deal, Safaricom is to develop a security system for police operations in Nairobi and Mombasa.

READ: Safaricom gets Sh6.7bn waiver in police deal

The system will be deployed on the 400MHz frequency and run parallel to the commercial one. “We are going to announce the commencement of deploying the national security communication system soon,” Mr Collymore said.

The agreement with the government holds that the infrastructure on which the security system will run belongs to the National Police Service.

Safaricom is undertaking the work on a build-operate-and-transfer model that will see the police take ownership upon expiry of the agreed contract period.

Deployment of a commercial 4G network is expected to give Safaricom a first-to-market advantage over its mobile rivals Airtel and Telkom Kenya (Orange).

The industry regulator, however, has put a condition that Safaricom must share 30 per cent of its 4G network on commercial agreement with its rivals.

READ: Safaricom to cede 30pc capacity on 4G network

The firm has been seeking to cut reliance on voice revenue, whose growth has nearly flattened out in recent years due to falling rates.

Safaricom’s half-year results covering the six months to September 31 showed that voice contributed 55 per cent of the telecom firm’s Sh79.3 billion revenue while non-voice services accounted for 40 per cent.

Mobile data, Safaricom’s fastest growing business segment, rose 52.9 per cent to Sh6.5 billion during the period or nearly two thirds the Sh9.3 billion total revenue that the company earned from data in the year ended March 2014.

Voice revenue, meanwhile, grew by a modest 6.4 per cent to Sh47 billion.

Initially, the Government had indicated that it would deploy a joint 4G network for use by all service providers, but Safaricom pulled out citing the slow pace at which plans to implement it were moving.