China races for business in Kenya’s telecoms sector
Huawei and ZTE Technologies have been gaining ground in the infrastructure market and are now moving to the retail segment with low cost mobile phones. Photo/FREDRICK ONYANGO
The battle between China and Western nations for business in Kenya is moving to the telecoms sector as the Asian country grows its market share in the mobile handset and infrastructure market at the expense of European firms.
Chinese firms
Until five years ago, the Kenyan telecommunications sector heavily leaned towards European based firms such as Ericsson, Alcatel-Lucent and Nokia.
More recently, however, China based firms such as Huawei and ZTE Technologies have been gaining ground in the infrastructure market and are now moving to the retail segment with low cost mobile phones and internet modems.
As a result, they are gaining markets share in the retail segment that has remained the domain of European based brands such as Nokia, Motorola and Samsung, firms that are finding it difficult to match the Chinese brands on pricing.
“The perception that Chinese made products were of poor quality is fast fading,” says Vincent Mutavi, a telecom analsysts. “Besides being low cost,, firms like Huawei are matching if not surpassing European firms on quality, giving them an edge in price sensitive markets such as Kenya,” added Mutavi.
More recently, Huawei has begun positioning itself as a key player in the gadget manufacturing space, riding on key partnerships with mobile service providers such as Safaricom to provide cheaper alternatives to established brands.
The firm is now moving deep into products that target the mid and high income earners with gadgets such as modems and smart phones, in a strategy that is attracting both retail and corporate clients.
On January 20, the firm introduced one of the cheapest mainstream smartphone in the Kenyan market retailing at Sh8,499 in partnership with Safaricom, which is looking at deepening the penetration of Internet among its estimated 17 million subscribers.
The smartphones market is dominated by highly-priced models with most of them retailing at above Sh25,000 ,placing them above the reach of the majority of consumers.
“We are looking at collaborations which will help us drive the internet evolution in the emerging markets such as Africa,” said Huawei Kenya Chief Operations Officer Radoslaw Kedzia.
Another Chinese brand ZTE Technologies has focused its attention in the low the segment market, a move that has seen the Chinese brands represented across the income classes. And operators are scrambling for tie-ups with these firms.
“Our biggest challenge has been finding a manufacturer who can provide quality goods at the cheapest prices. No matter how low calling and data rates in this industry go, the only time they will have impact is when the cost of equipment and service provision come down,” said Bob Collymore, Safaricom CEO.
In the infrastructure market they now control the bulk of the market at a time when the mobile telephony firms have announced multi billion shilling upgrade plans.
Among some of the high profile deals that Huawei has landed in Kenya include the development and setting up of Telkom Kenya’s $22.6 million CDMA backbone.
It has also inked agreements with all four mobile operators to provide them with modems which consumers use to connect to mobile internet products.
Recently, Huawei also tied up a Sh12 billion deal with Safaricom for the roll out of the mobile firm’s 4G core network.
Chinese firms solutions are more readily adaptable to African markets and are usually cheaper than those offered by other firms, operators say.
