Kenya Power will start offering fixed internet services by June next year in a shift that will put it in competition with telcos and trigger fresh price wars in the battle for the market.
The State-owned power utility has been piloting the fixed internet provision to a number of its corporate customers for the past few months setting the stage for the roll-out of the new business line as part of diversifying revenues.
Kenya Power acting Managing Director Geoffrey Muli said that the power utility will launch the service before the end of the current financial year taking the battle to market leader Safaricom, the Wananchi-owned Zuku and other Internet Service Providers (ISP).
Entry into the fixed internet market will be a step up from the current model where the power utility has been leasing fibre-optic cables attached to its transmission lines to ISPs.
“Our plan is to launch our Lit Fibre business in the course of this financial year,” Mr Muli said yesterday at the inaugural exhibition forum bringing together Kenya Power, manufacturers and technology firms.
Kenya Power will leverage its vast network of over 7, 000 kilometres of fibre cables that are attached to its power transmission line offering dark fibre services to the country’s and the region’s ISPs.
Safaricom is the dominant player in the fixed internet market with a share of 37 percent followed by Wananchi at 29.2 percent as at September last year, according to data from the Communications Authority of Kenya (CA).
Demand for internet services has surged over the past two years following the outbreak of the Covid-19 pandemics that fueled remote working and online learning in a bid to curb the spread of the disease.
The CA says that the fixed internet market is largely untapped, offering telecoms firms and Kenya Power an opportunity to grow revenues.
In 2010, Kenya Power signed a 20-year lease agreement worth Sh421 million with Safaricom for use of a pair of fibre cables.
It also inked deals with telecoms firms Wananchi Group and Jamii Telecoms with each signing five-year leases worth a total of Sh403 million.
Entry into the fixed internet market will rattle the ISPs that have been riding on the Kenya Power network to sell data, giving the electricity distributor a head-start in the race for rural Kenya.
Kenya Power reckons that revenue from selling data to its corporate customers will diversify income and help it tackle challenges facing the electricity division.
The shift comes at a time Kenya Power is grappling with electricity tariff cuts that will hit the utility’s revenues.
The government cut power tariffs by 15 percent in January in a bid to lower the burden of electricity bills to households and businesses, a reduction that is estimated to leave a Sh26 billion hole in the company’s books.
Kenya Power posted a net income of Sh3.8 billion in the six months to last December from Sh138 million a year earlier. But the full-year performance for the period ended last month will be hit by the 15 percent tariff cut.