Kenya Data Networks changes tune

September 15, 2010
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, NAIROBI, Kenya, Sep 15 – Kenya Data Networks has announced a reorganisation of its business that will see it shift from the retail market to the wholesale line.

Chief Marketing Officer Vincent Wang’ombe told a press briefing on Wednesday that the realignment, which will see it transfer most of its retail products to its sister company Swift Global, has been prompted by the desire to cut its operation costs and improve service delivery.

“We are basically telling all those ISPs (Internet Service Providers) who felt threatened by us in the past; all those providers that will be looking for a partner who has infrastructure to come to us so that we can discuss how we can provide services,” he said.

There has been disquiet in the internet sub-sector over KDN’s strategy to provide connectivity in the retail market in a bid to increase its revenue streams which put the firm in direct competition with its key customers.

This announcement however is likely to be good news to the providers who can now compete in a level playing field in the sector where internet penetration is increasing rapidly.

The market will now be left with three main infrastructure providers namely KDN, Jamii Telecommunications Limited and Telkom Kenya which currently manages the National Fibre-optic Backbone Infrastructure (NOFBI) terrestrial network.

Instead of rushing to invest in their own infrastructure, ISPs will now seek to partner with the carriers to provide services to their clients. This means that they don’t have to incur the costs of building the networks which was initially passed on to the consumers.

Estimates from the industry indicate that it takes about Sh1 million to lay one kilometer of fibre, an exercise that most service providers find very costly.

Although he could not quote figures of how the revenues will be impacted, the manager admitted that they will suffer revenue losses in the short term but expressed optimism that this trend will be reversed once there’s increased usage of its networks.

With this restructuring out of the way, Mr Wang’ombe said KDN would be able to concentrate on its core business of increasing its fibre footprint in Kenya and the region.

“We have laid fibre optic cables all the way from Mombasa to Kampala( Uganda); we have the metro fibres in Mombasa, Thika, Nairobi, Eldoret and Kisumu  and in future we will be looking at connecting to Ethiopia, Southern Sudan and even Somalia,” he said without divulging how much they would pump into this project.
 

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