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4G spectrum to be leased using wholesale model in Kenya?

Kenya is reportedly considering employing a wholesale model for LTE rather than inviting operators to bid for their own spectrum licences. The country’s government is thought to be readying a tender which would allow a consortium of operators to “implement and manage” an LTE network, with operators outside of the group able to lease spectrum rather than acquire it.

Bitange Ndemo, the country’s Permanent Secretary for Information, said: “We are putting an advertisement of the 4G spectrum licensing either by the end of the week or early next week which is going to be done through Public Private Partnership. We are not going to give it to individual operators but a group, so they must work as a consortium."

Previous spectrum licensing processes have created problems for the government, most notably 2007’s 3G auctions when it lowered the price of a licence to US$10 million for two operators – Airtel and Telkom Kenya – after market leader Safaricom had already paid US$25 million for its licence. The number one operator initiated legal proceedings to gain compensation.

A wholesale model would see spectrum provided by the government as equity, according to Ndemo. The network would then be constructed via a collaboration between operators and suppliers.  Leasing spectrum rather than buying it would likely prove more cost effective for operators.

There is however a potential fly in the ointment – Safaricom has reportedly already begun a series of network upgrades and trials with a view to launching its own commercial 4G services, and this could derail the government’s proposals.

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