Econet Wireless Kenya launched operations as the country’s fourth mobile operator at the beginning of December, marking the end of long and twisting journey for the South Africa-based telecoms operator, which was initially issued the licence in 2004.

It had been suggested that Econet in its own right could not finance the rollout of the network, and was rescued earlier this year by Indian mobile telecoms company Essar Communication, a subsidiary of Essar Global, which acquired a 49 per cent stake in the Kenyan licensee.

Essar acquired the stake from Econet Wireless International, which held a 70 per cent controlling stake in the licensee, and had been reported to be scouting for a suitable financier since the Communications Commission of Kenya confirmed the award of the licence in September 2007.

When Essar acquired its stake in Econet Wireless Kenya, it was reported that the Indian operator would invest as much as US$500 million on the rollout of the GSM network.

The Kenyan operation is branded ‘Yu’, and represents the first expansion outside of India for Essar in the communications sector.

“We thought the Kenyan opportunity was a good one as it combines low penetration with high prices, and high margins,” commented Michael Foley, CEO for East Africa of Essar Communications. “There are incumbent business models in place at the moment and there is an opportunity to reap benefits from improved technology. It is as simple as who has the gold, rules.”

Yu launched with a rate of KES 7.50 (US$0.10) per minute to all other mobile networks, and is offering an additional incentive of paying all Yu subscribers KES 0.75 per minute for receiving calls from the other Kenyan mobile networks. The accumulated bonus airtime will be credited the following month for usage.

Yu has worked with Ericsson as its primary infrastructure provider, with Foley believing that low cost infrastructure is not always the best option for greenfield players in emerging markets such as Africa. He said it took Yu five months to roll out the network in preparation for launch, and that much of the nascent operator’s strategy will be based on automation, a focus on processes, and outsourcing.

The three incumbent operators in Kenya are Safaricom, Zain and Telkom Kenya (Orange Kenya).

If there had been any doubt whether the pace of business was slowing down on the back of the global economic meltdown, comments made by Chris Gabriel, CEO of Zain Africa at Africa Com brought the issue clearly into perspective. “We are shopping. We have US$4.5 billion in cash from our rights issue, and we are looking to spend it,” Gabriel declared, stating that over the next 12 months Zain was looking to close three or four acquisitions. “Our strategy is based on building scale, leveraging very high growth markets and the creation of a global brand,” he added.

Africa’s pre-eminent telecoms players assembled in Cape Town for the 11th annual Africa Com event last month, concerned whether the global financial crisis is likely to affect the business in Africa. What became apparent after two days of networking and conversations was that m-banking, falling ARPUs and broadband expansion are that factors that operators on the continent are really concerning themselves with, while the tightening of liquidity is likely to spur further consolidation

However, even operators with the firepower of Zain are finding market conditions hardening, with the Kuwaitlisted operator having seen billions of dollars wiped off its market capitalisation over the last six months as financial markets lose appetite for stocks.

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Millicom International Cellular won the auction for Rwanda’s third mobile licence, with a bid of US$60 million.

Millicom’s US$60 million Rwandan licence will extend the company’s operations to eight African countries

Millicom said it beat three other bidders for the 15-year licence, and will own 87.5 per cent of a new joint venture with local company Marathon Corporation.

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Pan-African and Arab mobile operator Zain has reduced the subscriber target of its ACE (Accelerate, Consolidate, and Expansion) strategy to 110 million subscribers, down from a target of addressing 150 million subscribers by 2011. The three pillars of Zain’s ACE strategy, which were devised by group CEO Saad Al Barrak, had been to attain a US$6 billion EBITDA by 2011, become one of the top 10 leading telecoms
companies in the world by market capitalisation, and exceed 150 million customers across all its operations.

Speaking at the Africa Com event in Cape Town last month, Zain Africa CEO Chris Gabriel, publicly referred to the updated subscriber forecast, and the original 150 million figure no longer appears on the company’s website.

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Econet Wireless Kenya is set to launch operations as the country’s third mobile operator, by the end of November, according to Michael Foley, CEO for Africa of Essar Communications. The journey to commercial launch has been a long and twisting one for the Econet Wireless International, which was initially issued the licence in 2004 following lengthy court battles.

It had been suggested that Econet in its own right could not finance the rollout of the network, and was rescued earlier this year by Indian mobile telecoms company Essar Communication, a subsidiary of Essar Global, which acquired a 49 per cent stake in the Kenyan licensee.

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