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A
GLOBAL/ COUNTRY STUDY AND REPORT
ON
TELECOM SECTOR OF THE KENYA
Submitted to
MARWADI EDUCATION FOUNDATIONS OF INSTITUTIONS, RAJKOT
IN PARTIAL FULLFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
IN
Gujarat Technological University
UNDER THE GUIDANCE OF
Prof. Hemali Tanna
(Assistant professor)
Su bm i t t e d B y E n r o l lme n t No .
Soyabmahamad 117340592173
Hina Ranpariya 117340592175
Sagar Chotai 117340592176
[Batch: 2011-13]
MBA SEMESTER III/Iv
Marwadi Education Foundations of Institutions, Rajkot
Affiliated To Gujarat Technological University, Ahmedabad
April 2013
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STUDENTS DECLARATION
We, Soyabmahamad, Hina Ranpariya, & Sagar Cho tai ,hereby declare that the report for
Global/ Country Study Report entitled TELECOM SECTOR OF THE KENYA is a result of
our own work and our indebtedness to other publications, references, have been duly
acknowledge.
Place: Rajkot
Date: _______
Soyabmahamad ____________
Hina Ranpariya ____________
Sagar Chotai ____________
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PREFACE
In todays era of global business activities, we can understand that all of the countries are
trying to become a global one. So they are connecting their business activities with the
countries of the world. And from the earlier system of bartering the goods, monetary aspect
has been synchronized and modern business system has been established.
We know that, majorly trades are done for goods and services. And for that all countries are
generating exports as well as imports. From this, country can be able to earn foreign
exchanges and it will be helpful to grow the economy of the country.
There are majorly three kind of divisions are made according to the economy of the country
i.e. developed country, developing country and under-developed country. Each under-
developed countries of the world will consume the resources and become developed
gradually. These African countries are coming under under-developed stage and Kenya is
one of them.
Here according to our title, we are going to get highlights of major trading partners of Kenya,
in which we get the knowledge of countries with whom Kenya is dealing and getting different
goods, the quantity of the goods as well as how it is affecting to the economy of Kenya.
As far as Kenyas trade is concerned, India is one of the major partners of it. So we will get
more emphasized detailed study regarding the dealings and business transaction of Kenyan
economy with Indian economy. And so we will understand that importance of their differentgrowth related to different exports/imports of goods and services included with Indian
transactions.
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ACKNOWLEDGEMENT
It is a moment of pleasure that to present this report undertaken by us as country research of
Kenya for the part of our Master of Business Administration. Having completion on the
moment of the partial project work, we realized the importance of the people who have
supported us.
First of all, we are giving credit of our work to the dean sir of our MBA Department of our
college, Dr. S.C. Reddy. He has allotted us this great work, which can be a part of our overall
growth of the knowledge along with professional opportunities to work outside India.
We would like to express our gratitude to our guide, Prof. Hemali Tanna for helping us at all
the moment of difficulties. She has put her time and efforts along with us without considering
her personal inconveniences or pressures of her other works. So we are sincerely thanking
her for the same.
Here in this work of group efforts, how can we forget the activities of our group member? So
we, the members of our group are thankful to each other and we achieved the experience of
team work, which we can utilize for our further carrier in our life.
We have utilized the helping resources for accumulation of the data and other necessary
information. For that todays smart technological environment and other equipment have
played vital role for partial completion of this global country report on Kenya. Today world has
become just like the global village that no places are remaining without the touch of thetechnology. And we have taken benefits of the same.
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CONTENTS
INTRODUCTION .................................................................................................................................................. 1
PHENOMENAL MOBILE PHONE GROWTH ................................................................................................. 4
MARKET SIZE OF KENYA ................................................................................................................................ 4
INTERNET DEVELOPMENT ............................................................................................................................. 5
KENYA EXPANDS BROADBAND NETWORK.............................................................................................. 6
HYSTORICAL EVOLUTION............................................................................................................................... 7
BUSINESS ACTIVITIES OF TELECOM SECTOR ........................................................................................ 9
COMPARISON OF TELECOM SECTOR OF KENYA WITH INDIA ......................................................... 17
PRESENT POSITION AND TREND OF BUSINESS ................................................................................... 23
POLICIES AND NORMS................................................................................................................................... 23
POLICIES AND NORMS OF KENYA FOR TELECOM SECTOR ............................................................. 25
GOVERNMENT POLICY ON ICT SECTOR .................................................................................................. 29
RECENT POLICY CHANGES IN INDIA AND THEIR IMPACT ................................................................. 30
BUSINESS OPPORTUNITIES......................................................................................................................... 28
BUSINESS OPPORTUNITIES IN FUTURE .................................................................................................. 31
CONCLUSIONS ................................................................................................................................................. 33
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KENYA TELECOM SECTOR
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INTRODUCTION
The telecom services have been recognized the world-over as an important tool for socio-
economic development for a nation. It is one of the prime support services needed for rapid
growth and modernization of various sectors of the economy.
The Kenyan Information and Communication Technology (ICT) sector is poised for a
technological explosion in future as the government is bracing itself to supply the human
resources, legal structures, finance and infrastructure in order to support ICT initiatives.
Also, all the technology-related equipments are readily available in the country due to the
presence of distribution centers of various technology and hardware manufactures.
Since the beginning of the liberalization of the telecommunications sector in 1999, Kenya
has seen fast internet growth and even faster mobile phone growth. Encouraged by thisdevelopment, the government has plans to turn Kenya into eastAfricas leader in information
and communication Technology (ICT). Since 1999, Kenya has experienced radical changes
as the liberalization process of the telecommunications sector began. Of vital importance to
the process was the establishment of the communications commission of Kenya (CCK) in
February if the same year through the Kenya communication acts, 1978. CCks role is to
license and regulate telecommunications, radio communication and postal services in
Kenya. Since then a visible boost has gripped the industry.
Spectacular failure of many national economies in Africa and Asia under nationalization and
central planning makes the Kenyan case of wide interest and significance for those
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concerned with development strategy. The economic role of the telecommunications sector in
Kenya has been the subject of significant economic and business research. Based on that
research and on a series of field interviews carried out in June 1991, we have drawn several
conclusions:
Expanding the scope and enhancing the quality of the telecommunications services offered
to rural and urban businesses yields economic benefits far in excess of the costs incurred.
Despite major expansion of the public network during the 1980s and early 1990s, there are
still un-served or underserved user requirements of major economic significance; there are
large direct and indirect benefits in foreign-exchange earnings to be derived from improving
telecommunications services; these benefits are particularly valuable to a country like Kenya
with an economy strongly linked to international trade.
The challenges faced by the makers of telecommunications policy in Kenya are exceptionally
demanding. To meet of economic needs, it will be necessary to expand the network, enhance
service quality and features, and upgrade operational efficiency and productivity. Kenya has
a rapidly expanding economy, but also has one of the world's highest population growth
rates--by the year 2000 its population is expected to reach 38 million. Kenya will also need to
invigorate agriculture and enhance the lives of those in its rural areas to stem the tide of
migration into the towns. Five million new jobs will be needed in the urban areas if the
country is to avoid massive unemployment and social unrest.
Kenya's government has responded to these challenges with a market-oriented economic
policy, which emphasizes openness to the world economy and export-led growth. This policy
necessitates a more universal and reliable telecommunications network than would be
needed had Kenya attempted a predominantly inward-looking, centrally-directed economic
strategy similar to those attempted by some other African countries.
As in other countries that rely to a high degree on exports for both job creation and foreign
exchange, economic policy in Kenya must ensure that the export sector is fully competitive in
the global marketplace. As this chapter will show, the mere availability of a commodity for
export (or of a tourist attraction to draw in visitors) is less and less a sufficient condition for
economic success. Quality, productivity, effective marketing and distribution in global
markets, superior customer service, and speedy and appropriate responses to changing
market conditions are all essential. An efficient and reliable telecommunications infrastructure
is essential to achieve these goals.
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Moreover, successful export economies need the participation of global corporate leaders to
set the pace for quality, technology, productivity, and innovation by implementing global "best
practices." Their direct investment, though useful, is not as indispensable as their broader
role as innovators, pace setters, and conduits for the transfer of technology and "best
practices." In Kenya, these global companies directly and indirectly support hundreds of
smaller companies and tens of thousands of employees. The operating methods of such
global companies require extensive use of both voice and data telecommunications,
domestically as well as internationally. Experience shows that global companies will focus
their management efforts and their investments where adequate telecommunications (as well
as other preconditions for productive, effective operations) permit them to remain globally
competitive
The history of economic development from the 1970s to the 1990s, especially the
spectacular success of export-led growth in certain newly industrialized countries in Asia
such as South Korea and Thailand, and the equally spectacular failure of many national
economies in Africa and Asia under nationalization and central planning, makes the Kenyan
case of wide interest and significance for those concerned with development strategy. The
economic role of the telecommunications sector in Kenya has been the subject of significant
economic and business research. Based on that research and on a series of field interviews
carried out in June 1991, we have drawn several conclusions:
Expanding the scope and enhancing the quality of the telecommunications services offered
to rural and urban businesses yields economic benefits far in excess of the costs incurred;
Despite major expansion of the public network during the 1980s and early 1990s, there are
still un-served or underserved user requirements of major economic significance; there are
large direct and indirect benefits in foreign-exchange earnings to be derived from improving
telecommunications services; these benefits are particularly valuable to a country like Kenya
with an economy strongly linked to international trade.
The substantial net in-payments of hard currency accruing to Kenya from
telecommunications carriers in other countries through the international settlements process
could be used as collateral for the financing of major investments in telecommunications.
This approach could help sustain the high rate of telecommunications sector investment that
is clearly require--a rate that might otherwise be difficult to sustain because of the financial
state of the Kenya Post and Telecommunications Corporation (KP&TC).
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This chapter reviews the efforts that have been made in Kenya to understand and meet the
telecommunications needs of economic development. It draws conclusions about the challenges that
must be overcome if the telecommunications sector is to play its essential role in supporting and
enabling continued economic growth--especially the continued growth of exports. It also offers some
ideas regarding the future of the telecommunications sector in Kenya.
PHENOMENAL MOBILE PHONE GROWTH
In 2000, some 180,000 Kenyans had access to a mobile phone. Bye the end of 2006 that
figure had grown to 7.3 million people an increase of more than 4000 %.
The fast-growing mobile sector is characterized by competition between two operators:
Safaricom, a 60/40 percent joint venture between the government-owned Telkom Kenya and
Britains Vodafone; and Celtel, a subsidiary of Africas third ranked phone company. Both
companies have made considerable growth and profits since their inception but still there is
enormous potential remaining in the mobile phone sector.
In March 2007, global telecommunications giant Ericsson opened a regional hub in Nairobi
as part of its ongoing emerging markets expansion programme. The mobile phone sector
currently accounts for 5 percent of Kenyas GDP and analysis show the sector as holding
great potential for further growth once a third mobile phone services operator is introduced
and mobile phone taxes are lowered.
MARKET SIZE OF KENYA
The total number of mobile subscribers in Kenya at the end of 2009 was 19.11 million,
resulting in a penetration rate of approximately 48 percent.
Total mobile subscribers in the country have increased at a rapid rate of approximately 459
percent from 3.42 million at the end of 2004 to 19.11 million at the end of 2009. The
corresponding increase in the penetration rate during this period has been from around 5
percent to 48 percent.
The country's mobile subscriber base is expected to increase further over the next few years,
resulting in a mobile subscriber base of 30.58 million and a penetration rate of 68 percent by
the end of 2014.
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INTERNET DEVELOPMENT
Kenyas internet sector has managed to grow considerably over 10 years with what started
as a handful of dial-up modems in 1995 evolving into a dynamic industry with numerous
internet hosts, nearly 100 licensed internet service providers (ISPs) and roughly 2.7 million
internet users in the country. There is an abundance of internet cafes in the main urban
centers and wireless technologies are available throughout Nairobi.
The Kenyan government has launched an e-government strategy, a programme that intends
to connect the countrys rural population. Beyond downloading pension forms and
embarking on other virtual interactions with Nairobi, citizens in the e-government Internet
Caf can access helpful information.
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KENYA EXPANDS BROADBAND NETWORK
The government is now supporting several projects aimed at boosting the countrys
broadband infrastructure with the most high-profile projects being the East Africa Marine
System (EAMS) and the East Africa Submarine cable System (EASSY), initiatives that will
connect the countries of eastern Africa via a high bandwidth fibre optic cable system with the
rest of the world. TEAMS, a multi-million dollar fibre optic cable link from Mombasa to Fujaira
in the United Arab Emirates, are expected to link East Africa to the rest of the world.
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HYSTORICAL EVOLUTION
Development of the Public Telecommunications Network Kenya's earliest
telecommunications connections to the outside world were the submarine cables linking
Zanzibar, Mombasa, and Dar-es-Salaam laid by the Eastern & South African Telegraph
Company in 1888. Internally, the construction of a telegraph net work began with a 200-mile
coastal line linking the port city of Mombasa with Lamu. Extension into the interior of the
country began in 1896 in conjunction with the building of the railway system, forming a dual
"backbone" for Kenya's communications infrastructure. The extension of the telegraph line
even overtook railway construction, reaching Nairobi in 1898 and Kampala and Entebbe in
Uganda in 1900. Telephone service soon followed. In 1908, the public telephone network
began service in Nairobi, the capital, and in Mombasa. In Nairobi that year, eighteen
telephone subscribers were connected.
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The subsequent history of Kenya's network was one of gradual but sustained expansion. By
1980, there were 73,932 direct exchange lines (DELs) in use in the public telephone network;
just over 84% were connected to automatic switching equipment and 75% ha d direct long-
distance dialing (STD or subscriber trunk dialing) capability. There were 1,228 telex lines in
use and 50 leased data transmission circuits in use. The network of 1980 represented a solid
foundation for future expansion even though it had significant shortcomings: 33% of long-
distance call attempts failed due to congestion, and at any given time 15% of exchange lines
were not in working order. [KP&TC Annual Reports; Tyler and Jonscher, 1982.]
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Business activities of telecom sector
Kenya's telecom market has had great potential for growth because of its previous low
penetration levels in both fixed and mobile markets.
2004 saw significant changes in the country's telecom industry, with the incumbent operator
Telkom Kenya losing its monopoly in the fixed-line and internationals bandwidth sectors.Licenses were also issued to a regional carrier, third mobile operator and several new data
carriers, thereby marking a significant change in the competitive landscape for telecom
services across the country.
The last five years has seen rapid growth due to new players entering the market, the
introduction of 3G services by the telecom operators and, very recently, duty being waived on
new mobile handsets and the allowance of number portability.
The official telecom regulatory body of the country is Communications Commission of Kenya
(CCK).
In 2009, the Government recognized these rapid changes and developments in technology
and introduced the Kenya Communications (Amendment) Act 2009. They are now
responsible for facilitating the development of the information and communications sector
and electronic commerce.
Mobile Market
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Mobile services in Kenya were pioneered with the launch of an ETACS network in 1993. But
due to issues such as the high cost of handsets and high charges for the service, the number
of mobile subscribers at the end of 1999 was only 20,000.
The number of operators providing mobile services in Kenya has now increased to four and
with improving mobile infrastructure there is coverage in all major towns and highways in the
country. The price of handsets has reduced due to the duty being waived by the Government
and the increase in operators has intensified competition leading to price competition in the
market.
Safaricom still dominate the market with a market share of 79% and the number of
subscribers had risen to over 19 million in 2009.
The CCK is planning to introduce number portability by the end of July 2010 which will give
mobile phone subscribers the option to switch between service providers without changing
their phone number. This is likely to work to the benefit of the smaller operators.
Market Size
The total number of mobile subscribers in Kenya at the end of 2009 was 19.11 million,
resulting in a penetration rate of approximately 48 percent.
Total mobile subscribers in the country have increased at a rapid rate of approximately 459
percent from 3.42 million at the end of 2004 to 19.11 million at the end of 2009. The
corresponding increase in the penetration rate during this period has been from around 5
percent to 48 percent.
The country's mobile subscriber base is expected to increase further over the next few years,
resulting in a mobile subscriber base of 30.58 million and a penetration rate of 68 percent by
the end of 2014.
Mobile Network Operators
Kenya's mobile market has four key players - Safaricom, Bharti (was Zain), Telkom Kenya
(Orange/France Telecom) and Essar Telecom Kenya (known as the brand Yu).
Safaricom dominates the market holding about 79 percent share and they currently believe
that they are being targeted by new competition rules introduced by regulators to safeguard
against abuse of their market dominance.
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The other market players welcome the rules as an attempt to monitor market segments
where there is a monopolistic situation and no form of price control.
Major players in market
Beeper Communications Limited
"Beeper Communications Limited is a local company launched in Nairobi in July 1998.
Operational also in Mombasa, Nakuru, Kisumu and Eldoret. Aims to offer advanced
telecommunication services as an alternative to similar services currently available in the
market, and to create a competitive environment in the industry by providing high quality
products at prices that are accessible to the majority of customers."
Broadcast Automation Technologies Ltd.
"Broadcast Automation Technologies Limited(BATL) specializes in a wide range of products
& services for the broadcast & I.T. industries."
Cellular Services(K) Ltd.
Cellular Services (K) Ltd. is a private telecommunication company specializing in mobile
phone Services. The company started its operations in September 1999. The main objective
was to provide cellular phones and related services, educate professionals and the general
public on the importance and needs of using cellular phones in day to day undertaking and
as an alternative communication means."
Beeper Communications Limited
Broadcast Automation Technologies Ltd.
Cellular Services(K) Ltd.
Monier International Limited
Telebell Limited
Safaricom Ltd
http://www.beeperkenya.com/http://www.batl.net/http://www.cellularkenya.com/http://www.cellularkenya.com/http://www.batl.net/http://www.beeperkenya.com/ -
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Monier International Limited
"Monier International Limited was established in 1991 to satisfy the growing need for high
quality advertising in the fast changing African market. Main head office is situated in Nairobi,
Kenya with branch offices in Dar es Salaam-Tanzania and Asmara-Eritrea. Advanced plans
are under way to open more branches in Addis Ababa-Ethiopia and the rest of Africa where
our products are sold. Monier International also works in partnership with L.A.D.M.Investment situated in Israel and is thus able to keep abreast of new technological
innovations in the field of outdoor advertisement. Monier International was the first company
to introduce the full colour photographic billboard posters to the East Africa Market."
Telebell Limited
"Telebell Ltd has been the market leader in telecommunications for the last 5 years. As a
registered vendor with KPTC Telebell Limited holds the agency for B.T. from the U.K. fortelecom equipment. In a rapidly increasing market Telebell offers the world renowned
Panasonic telecommunication products such as fax machines, telephones, answering
machines, executive phones, switch boards, cordless phones, typewriters and ordinary
phones. "
SERVICE QUALITY
The continuing concerns expressed by users focused mainly on the availability of service and
the degree of service reliability and congestion in rural areas; specific local problems in the
Nairobi industrial area (where a large amount of industrial activity takes place) and the Jomo
Kenyatta Airport area outside Nairobi; delays and unpredictability in the installation of new
exchange lines and leased lines; and delays in repairing faults.
In the Nairobi industrial area, network congestion was still severe at the time of our program
of interview fieldwork in Kenya in 1991. This has continued to be a concern for some
companies located in this area.
the telecommunications picture in Kenya is one of significant but uneven improvement in
service quality, with the most extreme problems of service interruption being overcome in
most locations (with important exceptions) and congestion, slow installation, and repair as
continuing concerns. It is indicative of the significance of these problems that
telecommunications difficulties figured prominently in the controversy in the early 1990s over
an (unsuccessful) proposal to relocate the world headquarters of the United Nations
Environment Program (UNEP) from Nairobi to Geneva.
http://www.monier2000.com/http://www.telebell.co.ke/http://www.telebell.co.ke/http://www.telebell.co.ke/http://www.monier2000.com/ -
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INDIAN TELECOM
OVERVIEW
The Indian Telecommunications network is the third largest in the world and the second
largest among the emerging economies of Asia. Today, it is the fastest growing market in the
world. The telecommunication sector continued to register significant success during the year
and has emerged as one of the key sectors responsible for Indias resurgent Indias
economic growth.
GROWTH & DEVELOPMENT
This rapid growth has been possible due to various proactive and positive decisions of the
Government and contribution of both by the public and the private sector. The rapid strides in
the telecom sector have been facilitated by liberal policies of the Government that provide
easy market access for telecom equipment and a fair regulatory framework for offering
telecom services to the Indian consumers at affordable prices.
GSM SECTOR
In terms of the Global System for Mobile Communication (GSM) subscriber base this now
places India third after China and Russia. China had 401.7 million GSM subscribers.
CDMA SERVICES
CDMA technology was introduced in India as a limited mobility solution. The introduction of
CDMA services has created competition, lowered tariffs and offered many citizens access to
communication services for the first time.
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MARKET PLAYERS IN INDUSTRY
There are three types of players in telecom services:
State owned companies (BSNL and MTNL)
Private Indian owned companies (Reliance telecomm, Tata Teleservices)
Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea
Cellular, BPL Mobile, and Spice Communications)
Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over
200,000 employees and more than 2.3 million shareholders. Tata Teleservices bouquet of
telephony services includes Mobile services, Wireless Desktop Phones, Public Booth
Telephony and Wire line services. Other services include value added services like voice
portal, roaming, post-paid Internet services, 3-way conferencing, group calling, Wi-Fi Internet,
USB Modem, data cards, calling card services and enterprise services.
Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in
1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai.
Vodafone Essar now has operations in 16 circles covering 86% of India's mobile customer
base, with over 45.78 million customers. Vodafone Essar, under the Hutch brand, has been
named the 'Most Respected Telecom Company', the 'Best Mobile Service in the country' and
the 'Most Creative and Most Effective Advertiser of the Year'.
Idea Cellular is part of the Aditya Birla Group, which is India's first truly multinational
corporation. Aditya Birla Nuvo Ltd. holds 35.7 per cent, Birla TMT Holdings Ltd. 44.9 per cent,
Grasim 7.5 per cent, and Hindalco 10.1 per cent in Idea.
Reliance Telecom's cellular services are available in 340 towns within its eight-circle footprint.Reliance Infocomm also offered for the first time in India, mobile data services through its
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RWorld mobile portal. This portal leverages the data capability of the CDMA 1X network.
Reliance Infocomm offers a complete range of telecom services covering mobile and fixed line
telephony including broadband, national and international long distance services, data
services and a wide range of value added services and applications aimed at enhancing
productivity of enterprises and individuals.
Bharat Sanchar Nigam Ltd. is World's 7th largest Telecommunications Company providing
comprehensive range of telecom services in India: Wire line, CDMA mobile, GSM Mobile,
Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN Services etc.
Within a span of five years it has become one of the largest public sector units in India.
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COMPARISON OF TELECOM SECTOR OF
KENYA WITH INDIA
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TELEPHONES - MOBILE CELLULAR
This entry gives the total number of mobile cellular telephone subscribers.
1998 2000 2003 2006
India 1,900,000 2,930,000 26,154,400 69,193,000
Kenya 6,000 540,000 1,590,800 6,500,000
2008 2009 2010
India 96,080,000 62,300,000 52,000,000
Kenya 11,440,000 4,969,000 5,965,000
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
1998 2000 2003 2006 2008 2009 2010
India
Kenya
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TELEPHONES - MAIN LINES IN USE
This entry gives the total number of main telephone lines in use.
1999 2000 2003 2005
India 18,950,000 27,700,000 48,917,000 49,750,000
Kenya 290,000 310,000 328,400 281,800
2008 2009 2010
India 38,760,000 37,750,000 35,090,000
Kenya 264,800 460,100 840,340
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
1999 2000 2003 2005 2008 2009 2010
India
Kenya
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TELEPHONES - MAIN LINES IN USE PER CAPITA
This entry gives the estimated number of fixed telephone lines per 100 people.
2000 2003 2005
India 2.73 4.66 4.61
Kenya 1.01 1.04 0.83
2008 2009 2010
India 3.38 3.24 2.99
Kenya 0.72 1.18 2.30
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2000 2003 2005 2008 2009 2010
India
Kenya
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TELEPHONES - MOBILE CELLULAR PER CAPITA
This entry gives the estimated number of mobile phone lines per 100 people. It is also known
as the mobile phone penetration rate.
2001 2003 2005
India 0.29 2.49 6.32
Kenya 1.76 5.03 13.63
2006 2007 2009
India25.79 31.07 64.1
Kenya 18.73 30.99 64.02
0
10
20
30
40
50
60
70
2001 2003 2005 2006 2007 2009
India
Kenya
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INTERNET HOSTS
This entry lists the number of Internet hosts available within a country. An Internet host is a
computer connected directly to the Internet; normally an Internet Service Provider's (ISP)
computer is a host. Internet users may use either a hard-wired terminal, at an institution with
a mainframe computer connected directly to the Internet, or may connect remotely by way of
a modem via telephone line, cable, or satellite to the Internet Service Provider's hostcomputer. The number of hosts is one indicator of the extent of Internet connectivity.
2003 2005 2006 2008 2010
India 86,871 787,543 1,543,000 2,707,000 6,738,000
Kenya 8,325 11,645 13,274 27,376 69,914
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
2003 2005 2006 2008 2010
India
Kenya
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INTERNET USERS
This entry gives the number of users within a country that access the Internet. Statistics vary
from country to country and may include users who access the Internet at least several
times a week to those who access it only once within a period of several months.
2000 2002 2003 2005
India 4,500,000 7,000,000 18,481,000 60,000,000
Kenya 45,000 400,000530000
1,055,000
2007 2008 2009
India 80,000,000 81,000,000 61,338,000
Kenya 3,000,000 3,360,000 3,996,000
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
2000 2002 2003 2005 2007 2008 2009
India
Kenya
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AFFECTED FACTORS OF KENYA TELECOM
In order to respond to today's dynamic business nature many firms have implemented
enterprise resource planning (ERP) systems. ERP can be defined as a large - scale
information system that integrates all business functions into one unified function.
Companies are realizing that they have to implement ERP in order to remain competitive.
This research project sought to identify and understand the factors affecting such
implementation in Telecommunication firms in Kenya, focusing on a case of Telkom Kenya.
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Present Position and Trend of Business
Accordingly, the Department of Telecom has been formulating developmental policies for the
accelerated growth of the telecommunication services. The Department is also responsible
for grant of licenses for various telecom services like Unified Access Service Internet and
VSAT service. The Department is also responsible for frequency management in the field of
radio communication in close coordination with the international bodies. It also enforces
wireless regulatory measures by monitoring wireless transmission of all users in the country.
The present telephone density in India is about 0.8 per hundred persons as against the world
average of 10 per hundred persons. It is also lower than that of many developing countries of
Asia like China (1.7), Pakistan (2), Malaysia (13) etc. There are about 8 million lines with a
waiting list of about 2.5 million. Nearly 1.4 lakh villages, out of a total of 5, 76,490 villages in
the country, are covered by telephone services. There are more than 1 lakh public call offices
in the urban areas.
The Sixth Session of the Kenya-India Joint Trade Committee (JTC) Meeting was held in
Nairobi on 12th and 13th October 2010, in accordance with Article X of the Trade Agreement
signed between the Republic of Kenya and the Republic of India on 24thFebruary 1981 in
New Delhi. Article 10.1 of the Bilateral Trade Agreement provides for continuous review of
the implementation of the provisions of the Bilateral Trade Agreement, examination
of measures for the solutions of problems which arise or may arise in the implementation of
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this Agreement or in the course of development of trade between the two countries and
consideration of proposals made by either Contracting Party within the frame-work of this
Agreement aimed at further expansion and diversification of trade between the two countries.
The volume of bilateral trade has shown remarkable growth since 2005-06. Bilateral Trade
has grown from US $ 625 million in the year 2005-06 to US $ 1,530 million in 2009-10,
registering a growth of 145 % in the last 4 years. Indias exports to Kenya have increasedfrom US $ 576 million in 2005 - 2006 to US $ 1,452 million in 2009- 2010. Similarly, Indias
imports from Kenya also rose from US $ 48 million in 2005 -06 to US $ 79 million in 2009-
2010. There is tremendous potential for further diversifying and expanding the bilateral trade
between both countries.
India requested Kenya for early implementation of the pan Africa e-network.
The ICT Board signed the Country Agreement with TCIL on 21st July 2010.
The ICT Board was requested to identify site locations so that the pre installation and
feasibility studies could be carried out by TCIL. Indian side also extended cooperation in
training of Kenyan personnel in the Advanced Level of Telecom Training Centre (ALTTC)
Ghaziabad and the Centre of Excellence in Telecom Technology and Management Mumbai.
Cooperation was also extended in the fields of setting up e governance infrastructure, ICT
services related to telecom operation support, and information call centers in agriculture
sector.
Kenya side said that the site will have been identified by end of October 2010. The national
coordinator has already been identified and the contact details will be conveyed. All the
equipment has been received and cleared by Kenya ICT Board. The equipment will be
dispatched to the identified sites for installation. ICT Board will cooperate with TCIL in
establishing a call center for the agricultural sector to revolutionalize flow of information
benefitting farmers immensely and also creating a database for other organizations.
Kenya had initiated an MOU for cooperation in some of the areas discussed during the5th JTC. The Indian side will respond so as to fast track implementation especially in areas
of capacity building.
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POLICIES AND NORMS
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POLICIES AND NORMS OF KENYA FOR TELECOM SECTOR
The Communications Commission of Kenya (CCK) is responsible for licensing
telecommunications operators. The Ministers responsibilities are limited to setting broad
policy objectives, which the CCK must take into consideration when awarding new licenses.
In issuing licenses, the paramount consideration is the provision of telecommunication
services to satisfy public demand. A board directs the affairs of CCK.
The board comprises:
A chairman appointed by the President
A Director General appointed by the minister responsible for telecommunications
Four permanent secretaries representing telecommunications, finance, internal
security, and broadcasting
At least five other persons not being public officers, appointed by the minister by virtue
of their expertise on matters of interest to CCK
There is unlimited discretion on the appointment of the members, whose terms of
appointment are set out in an individual letter of appointment. The government will continue
to have a controlling ownership of TKL and it is the duty of the Ministry of Finance
representative in the CCK to safe-guard that interest. Government ownership of the dominantplayer in the sector may be viewed to be in conflict with independence in decision-making in
actions against the commercial interest of TKL.
Additionally, if the past is a guide, it is likely that the representatives for the Ministry of
Telecommunications and Finance will be board members of TKL. Viewed against the WTO
Reference Paper, the regulator may be perceived to be closely linked with the TKL and
therefore fail to conform to the principles of the Reference Paper.
Already TKL and the CCK share one board member, which in essence compromises the
independence of the regulator.
The CCK has already weathered its first storm in the pre-qualification of six bidders out of 26
applicants for the second mobile operator license, in which several parties lodged complaints
for disqualification of certain applicants.
However, in awarding the second license, the CCK exhibited what has been widely
acclaimed as transparency by choosing a technically sound tender over another financiallyattractive tender. Vivendi Telecom bid US$55 million for rollout of 582 700 lines in five years
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against Orascoms bid of US$93 million for an undisclosed number of lines. Orascom was
disqualified on the grounds that its consortium details kept changing, including the withdrawal
of GTE (USA) from the partnership.
The Status Of Telecom In Kenya
Status in 1994
0.8% teledensity far below world average of 10% and other
Total phones: 8 mn with a waiting list of 2.5 mn.
Below 25% villages (1.7 lakhs) covered.
National Telecom Policy 1994 Announced.
Telecom a national priority for increased economic development.
Plan targets revised to have telephone on demand and all villages covered.
All services available internationally to be available in India by 1996.
Value-added services opened in 1992 (cellular mobile, radio paging, email, etc.)
Resource gap of Rs 23,000 cr to meet the revised targets necessitated private sector
participation.
Tendering process for selection of private players for Basic and Cellular services.
The First Phase Of Reforms In Telecom In India Leading To Privatization
Licenses awarded (in 1995-97) after tendering and bidding process:
8 GSM licenses in 4 metros (no bidding beauty parade).
34 GSM licenses in 18 state circles
6 Basic Service Licenses in 6 state circles
Results not satisfactory due to:
Actual revenue realizations far short of projections leading to operators being unable to
arrange finance for their projects and complete rollouts.
Government appreciates the concern of the operators and allows for mid-course corrections.
Challenges And Growth Of Indian Telecom Sector
India has emerged as one of the youngest and fastest growing economies in the world today.
One of the sectors that has shown the signs of profitability and contributed significantly to the
country's economy is the telecom industry. In fact, the Indian telecom market has gained
recognition as one of the most lucrative markets globally.
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The vast rural market holds a huge potential to drive the future growth of the telecom
companies. Further, the government's initiatives for increasing the telecom connectivity in
rural areas are also likely to aid the telecom service providers to extend their services in the
unconnected rural areas. The Indian Telecommunications network with 621 million
connections (as on March 2010) is the third largest in the world. The sector is growing at aspeed of 45% during the recent years
This rapid growth is possible due to various proactive and positive decisions of the
Government and contribution of both by the public and the private sectors. The rapid strides
in the telecom sector have been facilitated by liberal policies of the Government that provides
easy market access for telecom equipment and a fair regulatory framework for offering
telecom services to the Indian consumers at affordable prices. Presently, all the telecom
services have been opened for private participation. The paper examines the changing
landscape of telecom sector in the terms of challenges and opportunities.
The Indian mobile subscriber base is likely to sustain the rapid growth recorded in the past
few years. Presence of skilled labor pool, improving telecom infrastructure, favorable
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demographics, rising disposable incomes of consumers, declining tariffs, increasing demand,
growing attraction for mobiles with new features and greater availability of handsets at lower
prices, are expected to continue driving the growth of the telecom sector, going forward.
The growth of India as a knowledge based economy will not be possible without the growth
and expansion of the Indian telecommunications and IT sectors. This symbiotic relationship is
not lost on the government which has attempted to back the telecommunications sector byfostering an encouraging regulatory scenario. This has not only helped the
telecommunications sector to evolve in a dynamic manner but has enabled it to attract
foreign investments.
Telecom spectrum is a scarce resource and with so many scams happening right under the
governments nose, it is no surprise that the situation looks quite grim. But despite all the
hiccups, the future is fresh with promise as each day; the mobile is finding more acceptances
and becoming an inevitable part of our lives. Perhaps, that is a single shimmer of hope that iskeeping the sector going. The area which needs immediate attention is the need for flexibility
in the regulatory mechanism. The telecom legislation at present seems to be archaic laws
and the need of the industry right now is a mechanism that can continuously adapt itself to
the changing needs of the industry. There is no doubt at all that the coming years are going
to be exciting years for the Indian telecom sector.
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GOVERNMENT POLICY ON ICT SECTOR
The Government of Kenya has embarked on a series of initiatives to revitalize and transform
the economy into a modern market-oriented one. The aim is to improve the economic well
being of Kenyans by establishing Kenya, in the medium term, as the centre of industrial and
financial activities in the region.
The sector policies aim to define the framework within which telecommunications and postal
services will be provided. The overall Government objective for the sector is to optimize its
contribution to the development of the Kenyan economy as a whole by ensuring the
availability of efficient, reliable and affordable communication services throughout the
country.
The primary motivation for growth in ICT has come from the private sector, with the role of
governments being that of a facilitator for creating an enabling environment. The challenges
to incorporate ICT in various aspects of economic development centers on five major areas
are:
Support to small and medium business
Education
attracting high tech industry
Access to technology infrastructure
Business friendly government
Industry structure
One of the immediate goals of the telecommunications sector reform was to increase
telecommunication supply. The immediate result of the reform has been witnessed in high
growth in all areas that were open for competition. Low growth was noted in the areas without
competition notably in the provision of fixed line services. Competition no doubt released
resources from the private sector to serve the demand that could not be served under a
monopoly environment.
The Communication Commission of Kenya (CCK) reviewed and segmented the
telecommunication sector market into various service streams that are licensed separately
as:
Facility based public fixed telecommunication service
Land mobile radio communication service (type 2 carrier)
Fixed and mobile satellite services
Facility based data communications networks and services
Internet facilities and services and
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Value added services (VAS)
RECENT POLICY CHANGES IN INDIA AND THEIR IMPACT
The government had initiated policy changes largely in the following areas:
Restructuring the sector
Increased investments
Technology development and transfer
Service provision
The objective was to provide accelerated growth in infrastructure and services, improve
customer service, provide autonomy and flexibility within the sector to expedite growth, raise
finances from the public, and provide an effective regulatory and policy environment. In the
following we attempt to review the policy changes, assess the impact, and suggest directions
for improvement.
Business Opportunities in future
There is currently no significant export of ICT products and services. However there are
several start-ups who have successfully tapped into the outsourcing industry, primarily call
centers, business process and data entry, and this area seems to have great potential for
growth in the medium and long term. Mecer, a South African computer manufacturer, has set
up its regional assembly plant of desktop computers in Kenya. This plant exports 50 per cent
of its output to other countries in the greater East African region. Finally a lot of imported ICT
equipment, especially mobile phone handsets, is re-exported to the neighboring countries
however with no value addition taking place in Kenya.
Political risk
There are no perceived political risks in the ICT industry in Kenya. The current government
and any likely future governments are bound to value to potential ICT brings to the private
and public sectors. Besides developing the 2006 Kenya ICT Strategy and pushing for the
implementation of the ICT act, the government has committed itself to digitize its operations
by 2008, e.g.
Making forms and other paperwork available online, and thus accessible at any web caf or
office with Internet connection throughout the country.
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BUSINESS OPPORTUNITIES
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Business Opportunities in future
As a regional hub and a financial capital of the East and Central Africa region, Kenyas
competitive advantage as an ICT investment destination is supported by various investor
friendly factors that include:
Regulatory framework
The establishment of Communications Commission of Kenya (CCK) as the regulatory body
provides an investor with a one-stop body for registration and facilitation thus reducing
bureaucracy. The regulation of the sector and granting of licenses remain the responsibility of
CCK.
Availability of a well-trained labor force
Kenya has a well-trained English speaking labor force with skilled personnel trained in ICT
and related fields. ICT and computer learning is currently offered at both secondary school
level and in universities and tertiary institutions in the country. Wages in Kenya are generally
reasonable and this extends to the ICT sector.
Kenyas relation with the global information infrastructure
Kenya is an active member of the International Telecommunications Union, ITU. Kenya is
also a participant and a signatory to a number of international conventions and standards
relating to ICT.
Diversified experience
Kenyans are involved in virtually all areas of ICT. Whether in telecommunications, hardware
components, software, or Internet service provision, Kenya has a well-established group of
companies involved in all of these areas.
Access to the regional market
Kenyas membership in regional trading bodies such as COMESA, African Union and the
East African community provides potential investors with a large potential market for their
products and services.
The Kenya government can guarantee investor friendly arrangements such as:
The Export Processing Zones (EPZ) program which offers attractive incentives to export-
oriented investors
Kenya Investment Authority to promote all other investment in Kenya including inManufacturing under Bond (MUB) program
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The Tax Remission for Export Office (TREO), a program for intermittent imports for export
production
Generous investment and capital allowances
Double taxation, bilateral investment and trade agreements
The liberalization policy allowing for private sector participation in the ICT sector
Reduced taxes on computer hardware and software (zero rating of import duties on PCs)
Removal of licensing requirements on information and broadcasting services
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CONCLUSIONS
India has begun a process of telecom reform without any coherent long term plan. For the
benefits to be available to the economy a number of actions would have to be taken, viz.,
separation of policy and operation, corporatization of at least some divisions of telecom
service, and implementation of a long term training policy and monitoring systems to ensure
fair access to the network. Ad-hoc nature of the reform process would lead to minimalbenefits and at times may be dysfunctional. The speed of implementation of reforms needs to
be accelerated. Implementation of many of these suggested measures may require strong
political will and a concerted effort. This paper highlights the role of political will and
employees concerns in implementing reforms and the need for top management in
addressing them. A well laid out plan for reform is likely to bring greater success and remove
uncertainty from investors and employees and bring in support for the reform process.
Indian telecom industry continued to register significant growth in 2008-09. Indian Telecom
network with about 414 million connections in February 2009 is the third Largest in the world,
while it is credited with the second largest wireless network in the World (see below section
on Mobile Telephony for details). At the current pace, the target of 500 million connections by
2010 is well within reach. The Government of India has reiterated its commitment to reach
out to remote and uncovered areas and to augment broadband facilities in rural areas.
The total number of telephone increased from 76.53 million by end-March 2004 to 413.85
million by end-February 2009. About 113.36 million telephones, at the rate of more than 14
million subscribers every month were added during 11 months of 2008 09. The total tele-
density increased from 12.7% in March 2008 to 35.65 per cent in February 2009. While rural
tele-density reached 13.81 % in January 2009, the urban tele-density shot up to 83.66%.
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Bibliography
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