Safaricom pays Sh2.5bn fees for high-speed Internet band

Safaricom consumer business unit director Sylvia Mulinge and data senior manager Julius Kundu during the launch of 4G network in Nairobi last October. PHOTO | FILE

What you need to know:

  • Safaricom has been piloting 4G Internet for the past two years but had until last month not received a final go-ahead from the regulator on provision of the services.

Safaricom has paid a Sh2.5 billion ($25 million) licence fee for high-speed 4G Internet spectrum, paving the way for the telecoms operator to expand its broadband services across the country.

The company has been piloting 4G Internet for the past two years but had until last month not received a final go-ahead from the regulator on provision of the services.

Kenya’s other main operators, Airtel and Telkom Kenya, are set to get the licences later this year on condition of completing their own trial phases. “Airtel and TKL (Telkom Kenya) are still in the process of doing trials after which they shall be given offers for 4G licence in the course of 2017,” said Communications Authority of Kenya (CA) human resource director Juma Kandie in a statement to the Business Daily.

In a separate statement Airtel said it was “currently working with vendors to procure equipment that will allow the trial phase of the 4G network”.

During the trial phase operators provide the 4G services within restricted geographical areas. However, with the licence Safaricom will extend the service across the country, giving it a head start over its rivals.

Airtel had in 2015 opposed a CA decision to grant Safaricom access to the preferred 800Mhz spectrum for 4G trials.

The company argued that this frequency band allowed for cheaper roll-out of 4G services and that the regulator was essentially aiding an uncompetitive market environment by granting Safaricom the spectrum.

The dispute was later resolved after the CA decided to allocate each of the three telecom operators equal share of the 800Mhz spectrum.

In addition, it was stipulated that the three firms would reserve 30 per cent of their allocated spectrum for smaller telecom operators.

Safaricom now says that the particulars of how this infrastructure will be shared have not been firmed up.

“The actual licence details are yet to be finalised with the Communications Authority of Kenya, which may include sharing obligations but we continue to hold discussions with a number of operators on possible agreements,” said Safaricom corporate affairs director Steve Chege in a statement.

High-speed Internet will be key for growth in the telecom sector at a time when voice revenues are beginning to flatten. The entry of over-the-top content providers such as Netflix and Amazon Prime into the local market is expected to drive this heavy usage of data.

Safaricom last year announced that it had connected seven Kenyan towns to 4G Internet. The company said it had 1,000 4G enabled base stations across the country and added that 800,000 devices on its network are 4G enabled.

In addition to subscriber revenue, Safaricom expects to leverage on high-speed Internet to generate revenue from a multi-billion shilling government contract in which the telco is connecting police stations in Nairobi and Mombasa to 4G Internet.

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