AccessKenya exits home Internet market

Corporate News

Kris Senanu, deputy CEO, AccessKenya. PHOTO | FILE 

By DAVID HERBLING

In Summary

• AccessKenya plans to invest Sh600m this year to connect 250 office complexes.

AccessKenya has exited the home Internet market in favour of the more lucrative corporate segment, a review of strategy that will also see it venture into Uganda.

The Internet service provider said it will not connect any new residential customers, arguing that the retail market has been dominated by cheaper broadband from mobile telephony providers like Safaricom and Telkom Kenya.

AccessKenya plans to invest Sh600 million this year to connect 250 office complexes in Nairobi and Mombasa to its fibre network, marking a strategic shift for the firm that has been a big player in the home Internet market.

It will also spend an additional Sh200 million to establish a subsidiary in Uganda next month where it will only target corporate customers.

“Our focus now is on large and corporate deals which offer higher margins,” said Kris Senanu, deputy CEO of AccessKenya.

“The coming of the undersea cables brought cheaper bandwidth and changed the landscape, with the retail market having very many players,” said Mr Senanu in an interview with the Business Daily.

The landing of three undersea optic fibre cables in Kenya resulted in wholesale prices for bandwidth falling to an average of $600 (Sh53,000) in 2010 from a high of $3,000 (Sh266,000) in 2008.

Safaricom currently offers 40 megabytes of mobile data at Sh50, implying the cost per MB is Sh1.25.

AccessKenya’s strategic shift comes amid increased competition in the lucrative corporate broadband segment that had total subscriptions of 1.4 million as of March.

The firm was ranked third with an 11.5 per cent market share or 11,360 users, according to the Communications Authority of Kenya.

AccessKenya’s dominance of this category has declined over recent years having dropped from a high of 40 per cent in 2011.

Wananchi Group is currently the largest player with a 44.7 per cent market share (44,254 users) followed by Liquid Telecom’s 17.8 per cent (17,600 users).

Telkom Kenya is fourth with 11.6 per cent (11,524 users) and is trailed by Safaricom’s 7.1 per cent (7,020) and Jamii Telecom’s 2,574 subscriptions equivalent to 2.6 per cent market share.

Mr Senanu said AccessKenya will continue serving its existing 2,000 domestic users who are plugged into the firm’s retail broadband product Access@home.

The retail Internet market is the fastest growing segment but has substantially lower spend per customer compared to corporate broadband.