Kenya has long been one of the most prosperous telecoms markets in Africa, and while saturation looms, short-term growth will remain strong according to BMI.
Based on a combination of regulatory and operator data, it is estimated that there were 23.891mn mobile subscribers in Kenya at the end of December 2010. This represented a penetration rate of 58.4%, up from 48.6% at the end of 2009. The market grew by around 2.3% during Q111 to reach 24.440mn subscribers, with high growth rates likely to continue in 2011 and 2012 before slowing as the market approaches saturation. Regulatory factors, including SIM registration, mobile number portability and low interconnection rates, are expected to reduce the incidence of multiple SIM ownership and, consequently reduce growth rates in the medium term. Total mobile subscriptions should be approaching 39mn by 2015, reflecting a penetration rate of about 83.6.
There could be respite for mobile operators following the government's intervention to suspend further cuts to interconnection rates because of the impact of lower tariffs on operators' margins. In May 2011 President Mwai Kibaki suspended the latest round of cuts to interconnection rates due to start by July 2011. It is uncertain if the suspension of interconnection rates is permanent or whether the regulator can resume cuts in the future. However, it is a relief for operators facing intense downward pressure on ARPU rates.
The latest regulatory data from the CCK show fixed-line subscriptions edged higher during Q411 after a sharp drop during the first nine months of 2010. By the end of December 2010, total fixed-line subscriptions were 380,748, up by 2.9% q-o-q. However, sustained growth is unlikely considering market data for H111 released by Telkom Kenya showing fluctuations in fixed-line subscriptions. This makes it difficult to forecast the sector's growth trajectory over the next five years, especially as there is no clear explanation for the sharp decline in subscriber numbers after a period of impressive growth. However, the market is expected to continue in a general downtrend, albeit it at a slower rate than previously forecast.
According to the regulator, there were 10.2mn internet users in Kenya at the end of 2010, significantly up from just 3.9mn a year earlier. Mobile internet access through 2.5G and 3G networks is the main driver of internet penetration in Kenya. Meanwhile, competition in the 3G market following the launch of commercial services by Airtel and Orange is set to boost broadband penetration in Kenya.