Safaricom to launch 5G network this year

Safaricom #ticker:SCOM will this year launch Kenya’s first fifth-generation (5G) mobile internet services targeting major urban centres, making it the inaugural operator to offer commercial and superfast services in the region.

Acting CEO Michael Joseph said the firm had completed testing and trials for the upgraded network as the company seeks to capitalise on burgeoning mobile Internet use in the country.

Safaricom - Kenya’s largest telecoms company - saw web data revenue grow fourfold over the five years to Sh38 billion, surpassing sales growth from voice business.

The 5G service is a central part of its attempts to further expand its data business to counter slower growth in voice calls revenue.

However, Safaricom subscribers who want to use the service will need to acquire new handsets that are compatible with 5G before they can enjoy the superfast Internet, which offers much faster data download and upload speeds that ultimately ease network congestion.

“We are ready to launch (5G) technically, but will choose the right time to officially launch later this year,” said Mr Joseph in an interview with the Business Daily. “We will launch probably in select cities.”

His comments were a pointer that the operator is likely to target major towns like Nairobi, Mombasa, Kisumu, Nakuru and Kakamega, which routinely witness increased data traffic.

The 5G launch will follow the December 2015 unveiling of the 4G network, which has helped Safaricom grow its revenues from data to Sh38.7 billion last year from Sh9.3 billion in 2014.

Kenya had 52.2 million mobile subscribers in the quarter ended June. Of those users, around 49.5 million had mobile data subscriptions, with Safaricom enjoying dominance in this segment.

Mr Joseph declined to disclose the cost of the under the radar investments on the 5G upgrade and the vendor behind the upgrade.

Safaricom has in recent years been working with Huawei, a Chinese company, which has been the subject of increased scrutiny in the Western world over the launch of 5G networks. Huawei remains one of Safaricom's top suppliers for the core transmission network and mobile money infrastructure, but Mr Joseph could not reveal if it was involved in the 5G project.

Last February, however, officials from both firms intimated that they would work together on a 5G project. They spoke on the sidelines of the World Mobile Congress held in Barcelona, Spain.

US Secretary of State Mike Pompeo has in the past suggested that the use of Huawei’s equipment posed a spying risk.

Wednesday, however, the Washington Post reported that a Swiss firm, Crypto AG, which supplied encryption services, had been bought by the Central Intelligence Agency (CIA) in 1951. The report implied that the CIA used the company to spy on at least 120 countries globally.

Last month, the United Kingdom decided to allow Huawei to continue as a supplier of its 5G networks but with restrictions. The UK took the move despite pressure from the US to block the firm.

Safaricom defends Huawei

One of the restrictions is that Huawei will only be allowed to account for 35 percent of the kit in a network’s periphery, which includes radio masts. However, it will be excluded from areas near military bases and nuclear sites.

Huawei said it had played an important role in helping it’s UK patners to develop and roll out both fixed and mobile networks.

Last year, Safaricom defended its working relationship with Huawei.

“Do we think that Huawei is a very competent service provider? Yes absolutely. Do we have fights with them? Yes, but they have been a very competent and very close partner of ours over many years,” Safaricom said.

It is still not clear if the Huawei will be Safaricom’s partner in rolling out 5G in Kenya.

Yesterday, Huawei said it was looking forward to working with carrier partners to bring 5G to Kenya in the near future.

“We have played a significant role in bringing fixed and mobile networks to Kenya,” said the firm in a statement to Business Daily.

Chipmaker Qualcomm has indicated that 5G could achieve browsing and download speeds about 10 to 20 times faster than those offered through 4G.

That would allow a consumer to download a high-definition film in a minute or so. Mobile gamers will also notice less delay - or latency - when pressing a button on a controller and seeing the effect on screen. Similarly, mobile videos should be near instantaneous and glitch-free while video calls would become clearer and less jerky under the 5G network.

This is the market that Safaricom is eyeing in the firm’s quest to increase sales from its data division.

Kenya’s telephony market has evolved over the past five years, with growth in data sales increasing faster than revenues from voice. Competition in this space is growing with Jamii Telecom being the latest to launch the 4G proposition, offering data at prices relatively cheaper than what is in the market.

Safaricom had earlier said it was targeting about 80 percent of the Kenyan population with its 4G network coverage by doubling it to 5,000 base stations by March 2020, covering all major towns.

Data from the Communications Authority of Kenya shows that Safaricom grew its mobile subscriptions 4.4 percent to 34.5 million in the three months ended September. Safaricom’s net profit for the six months through September jumped 14.4 percent to Sh35.65 billion on strong M-Pesa and mobile data revenue growth that offset a decline in voice and messaging (SMS) revenues.