To be connected to the Elige network, a customer downloads the app on Google playstore or Apple store on their phone, then registers as they would for a sim card.
Upon successful registration, a subscriber gets a unique number bearing Elige prefixes including 02056, 02057, 02058, and 02059.
The company says if the playing field was leveled, it would be talking of 500,000 subscribers.
Two long-time friends who had travelled out of the country had difficulty calling each other and their families back home due to exorbitant roaming charges.
Out of their frustration came an alternative telephone service that works off an existing internet connection.
Armed with Sh11 million in own savings, Elias Mwangi and George Mukenya started Elige Communications -a voice over internet protocol (VOIP) service provider- that allows calls to be made at 60 percent less than on telco networks.
“Call rates are not pegged on subscribers’ geographical location, meaning that even those in the diaspora still use the service as if they are in Kenya,” said Mr Mwangi, 35, an IT graduate from the Jomo Kenyatta University of Agriculture and Technology.
Active users
Elige, which started in 2014, operates from Westlands, Nairobi and recently unveiled an application dubbed Ambia offering its over 80,000 active users a consistent platform for calls.
Introducing the app was also partly in compliance with subscriber registration requirements of the Communications Authority of Kenya (CA).
To be connected to the Elige network, a customer downloads the app on Google playstore or Apple store on their phone, then registers as they would for a sim card.
Upon successful registration, a subscriber gets a unique number bearing Elige prefixes including 02056, 02057, 02058, and 02059.
As a way of dealing with fraudulent subscriber registrations, Ambia has a functionality that compares the face on someone’s ID to a picture captured in real time.
“This enables us to confirm that the person submitting the information is actually the person on the ID,” says Mr Mukenya, 38.
But their entrepreneurship journey has not been without setbacks. The two have had to fiercely fight incumbents with some of their disputes ending up in courts just to earn a seat at the telcos table.
The fight for recognition as a VOIP provider has been the fiercest with one telco “devising unfair practices” that have eaten into Elige’s revenues, slowing down expansion.
First, it was the telco’s hesitation to sign interconnect agreements with the start-up to govern how business will be carried out between parties.
Then followed the dropping of calls coming from Elige, with the telco alleging that they are international calls yet they are internet originated calls.
In 2018, the CA fined Safaricom Sh449 million for failing to connect calls made to smaller telecommunications firms including Elige Communications.
Gross turnover
Mr Mukenya explains that before Covid-19 struck, the firm was making an annual gross turnover of Sh86 million, but the fights with the mobile network operators have hit it hard causing revenue to drop almost 50 percent.
“What we need from the government is protection especially from the incumbents so they don’t keep on interfering with our networks,” he says.
The company says if the playing field was leveled, it would be talking of 500,000 subscribers.
Mr Mukenya says Ambia, the app offers a similar service as WhatsApp. The only difference is that it is operated by a local firm, thus generates revenue for government through taxes.
The app has brought competition to over the top (OTTs) players such as WhatsApp and Skype that do not pay taxes to government since they are owned by foreign firms.
“Aside from bringing competition in this space, we are able to bring revenue to the government,” points out Mr Mukenya.
Owing to the nature of the service, the firm’s biggest expenditure –aside from infrastructure costs -is integration with getaways such as Visa Mastercard and KCB.
These getaways charge anywhere between one and three percent of the revenue that the company makes.
Despite the setbacks, the founders are optimistic about the future buoyed by a recent review of interconnect rates by the CA.
Growing enterprises
In December, the regulator slashed domestic mobile termination rates (MTRs) and fixed termination rates (FTRs) to Sh0.12 from Sh0.99 effective January 1, 2022.
“At end of every month we do what we call net offs, where each operator tells the other the number of calls they’ve terminated on their network we pay each other the difference,” says Mr Mukenya.
But being the dominant player, Safaricom has enjoyed being paid, leaving the smaller telcos with limited resources to expand.
The two however see the decision by the CA as the first step to stem the tide, allowing the smaller firms to use their savings to grow their enterprises.
“And what that means is that there will be a ripple effect where we will be able to employ more people and be able to offer an array of other products along the way,” says Mr Mwangi of the firm that has seven employees .
