Growth on the wane in Kenya over 2011

Kenya's mobile market during H111 has seen a significant slowdown in overall subscriber growth according to BMI, following net losses by second-ranked Airtel Kenya and fourth-ranked Essar (Yu).

According to market data published by the CCK, the mobile market expanded by just 1.2% during H111 with net additions of 312,000 subscribers. This was significantly less than net additions of 4.941mn subscribers in H210, equivalent to 23.3% growth during that period. The slower growth in H111 likely reflects market saturation in urban areas, supporting the idea that rural roll-out holds the most potential for future subscriber growth. Mandatory SIM registration and mobile number portability (MNP) are likely to have driven down cases of multiple SIM ownership, which would contribute to slower subscriber growth in H111.

Total mobile subscriptions are forecast to reach 35.9mn by 2015, representing a penetration rate of 83.1%, but roll-outs in rural areas would boost subscriber growth during this period. In a bid to encourage network expansion to underserved areas, the Kenyan government reduced spectrum fees by an average of 41% in October 2011.

However, operators are increasingly investing in high value services such as mobile data to drive revenue growth, as opposed to network expansion in rural areas characterised by low ARPUs and high input costs. Orange Kenya launched 3G network services in August 2011 across Kenya's major cities, while Airtel is expected to follow before the end of 2011.

Kenya's fixed-line sector continued to fluctuate in H111, with net additions in Q111 followed by net losses in Q211. This resulted in total fixed-line subscriptions of 379,301 by the end of June 2011. This trend is likely to continue over the next five years as fixed to mobile substitution intensifies.

Meanwhile, the threat from VoIP is set to increase with the growth of internet services. In August 2011 MTN announced plans to offer voice services to fixed and mobile internet users, which will likely hold great appeal for Kenya's cost-conscious business telecoms users. Over the next five years, fixed-line connections in Kenya are forecast to reach 362000, reflecting a penetration rate of 0.8%.

According to the CCK, the number of internet users in Kenya reached 12.5mn by June 2011. However, the regulator revised down its historical data for internet subscriptions. In terms of fixed broadband connections and wireless broadband connections through dedicated data cards and USB modems, broadband subscriptions in Kenya are forecast to reach 788,000, equivalent of a penetration rate of 1.7%.

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