Small players disrupting Internet service in Kenya
When he recently accompanied President William Ruto during the US-Africa Summit Alex Chesosi, an entrepreneur, struck a deal with Intellimedia Networks, a company based in the US with offices in California and Virginia.
With the partnership, Mr Chesosi was able to incorporate Intellimedia Africa in Kenya, setting its eyes on deploying the Internet to special economic zones, school districts, distribution centres, smart cities, hospitals, transportation hubs, and manufacturing sites through a private cellular network.
Deploying a private cellular network will mean taking on major Internet service providers such as Safaricom, Wananchi Group which owns Zuku Fibre, Telkom and Airtel who have relied on either cellular technologies or fibre optic cables.
Intellimedia may not be the first company to make forays into private cellular market in Kenya, but the technology, if taken up by more players, could be revolutionary.
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“This (private cellular technology) is the antithesis of Wi-Fi, where you need a lot of capital, steel and human resources to deploy,” said Mr Chesosi, who spent 16 years working with the national carrier Kenya Airways before he ventured into business. “For private cellular network, it is very easy to set up. In a matter of hours, you have connectivity.”
Private cellular networks have been fronted as another avenue to take the Internet to far-flung areas in the country where fibre optic cables have not reached.
This is possible because private cellular networks are cheaper compared to the fibre or cellular technologies currently used in Kenya.
Cellular technologies require costly, licensed spectrum to operate. Large national carriers in Kenya — such as Safaricom and Wananchi Group — have the means to purchase spectrum, build nationwide networks and lease network access for individual customer use.
The competition will be stiff, not only because companies with deep pockets providing cellular technologies will fight back, but because they too can just join the private cellular network bandwagon.
Safaricom, which started offering fixed Internet connections in 2017, knocked Zuku from its perch as market leader in 2020 controlling 34 percent of the market.
Wananchi Group’s woes got worse after Jamii Telecommunications Limited (JTL) overtook in the race for Kenya's fixed Internet market, with data from the Communications Authority showing that JTL enjoyed a 23.2 percent market share in the quarter to September last year compared to Wananchi’s 22.7 percent.
For companies such as Safaricom, which is listed on the Nairobi Securities Exchange (NSE) and is the most profitable firm in the region, income from such telecoms services as voice and short messaging service (SMS) have been dwindling.
Even M-Pesa, a mobile money transfer service that has grown into Safaricom’s top earner, has come under threat from various digital finance technologies, especially from banks.
“We expect similar levels of capex (capital expenditure) investment in FY 2020 in the range of Sh36-39 billion. This will go into strengthening our mobile network and supporting our growth in fixed line as we look to further grow our fibre-to-the-home and fibre-to-the-business revenue streams,” Safaricom said in its 2019 annual report.
But proponents of private wireless are hoping to beat the big boys like Safaricom by being more cost-effective. Private cellular networks are also secure as there is no interference from other networks.
There are not many companies in Kenya with the capacity to offer private cellular network that Intellimedia Africa has partnered with Pente, which provides cloud-based private cellular network control and orchestration that enables the fastest implementation and control for LTE and 5G private cellular networks.
As recently published forecasts by global technology intelligence firm ABI Research highlight, the revenue opportunity for private cellular networks is forecast to grow from almost $7 billion (Sh1.04 trillion) in 2023 to more than $96 billion (Sh14.2 trillion) by 2030.
Mr Chesosi will be hoping that his new company will contribute to some of that growth.
“And to set up cellular towers you need to do surveys, get wayleaves, import steel, set up concrete works and put it up,” explained Mr Chesosi, who is also the chairperson of Genghis Capital, an investment bank.
Another way of achieving connectivity or setting up a network is by fibre optics which involves a lot of civil works and digging.
“What Pente has come up with is a private cellular solution that basically desires to bridge the digital divide, demystifying all those things and just using a box to set up networks,” he explained.
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In the 2019 population census, only 17.9 percent of the Kenyan households had home Internet that means there are a lot of Kenyans who will need Internet connectivity.
There are other value-adds that Mr Chesosi will be counting on as far as private cellular network is concerned. Due to its unique security encryption, private cellular also tends to be safer.
That is a critical selling point for businesses which are increasingly being threatened with security breaches and hackings. BY BUSINESS DAILY
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