Back to state after 20 years: Here’s how to save prodigal Telkom Kenya

In 1999, the government split the Kenya Posts and Telecommunications Corporation into Telkom Kenya, the Postal Corporation of Kenya and the Communications Commission of Kenya (CCK), the precursor to the Communications Authority of Kenya (CA) in a bid to enhance efficiency as viable commercial entities.

Telkom Kenya has since gone through all the technology stages, as it provided telecommunication services from voice on fixed line, CDMA on a fixed wireless platform, data services and infrastructure to all the other service providers in the telecoms and ICT sector.

In 2007, the telco was granted a mobile licence by CCK to provide and operate mobile cellular services. That year, the government announced a plan to privatise the fully state-owned entity to make it more efficient. Later in the same year, France Telecom acquired a 51 per cent stake in Telkom Kenya for $390 million (Sh47 billion).

After that, the giant entity could not compete in the market for telecom services with new entrants such as Safaricom, KenCell (now Airtel) and many other small-scale service providers despite launching mobile services and broadband data services and rebranding to Orange mobile as its commercial vehicle.

Submarine cable landing stations and the 3G mobile licence did not make it profitable. Neither did downsizing and restructuring of its manpower.

In 2015, Helios Investment Partners announced its purchase of France Telecom’s entire stake in Telkom Kenya. Subsequently, Helios negotiated with the Kenyan government for the latter to own 40 per cent of the new joint venture, with the investment firm retaining 60 per cent. In June 2016, final regulatory approval was received for the deal to proceed. The firm is still struggling to stay in business.

And now, the state has fully taken back Telkom Kenya for Sh6.09 billion, as the Business Daily reported on October 4. Well, here are some ideas on the way forward for the telco.

Underground cable 

To start with, from the onset of Telkom Kenya’s privatisation, the firm had underground cable infrastructure in almost all the major towns of Kenya that provided fixed telephone lines to its customers. With the entry of optic fibre cables, the company would have replaced all its underground copper cables with fibre cables to provide high-speed solutions on the same single connections. This would not only serve its own customers but also provide backhaul infrastructure service to all service providers.

Secondly, Telkom Kenya has telephone houses in Mombasa, Nairobi, Eldoret and Kisumu towns that it can modernise for seamless data centres (DCs) to provide service connectivity for emerging technology platforms and transit fibreoptic backhauls to the neighbouring countries like Uganda, South Sudan, Ethiopia and Rwanda. These services include e-commerce platforms like amazon, eBay, Google and Microsoft so that it becomes a one-stop shop for technology meet-me rooms (MMRs), and the real estate of racks.

Thirdly, the focus for telecom firms is no longer the voice business but on high-speed internet connectivity and other digital platforms that are emerging. The latter can be achieved through FTTX (fibre to the end user), an approach Telkom Kenya can benefit from as it has all the infrastructure in place in all our major cities where last-mile fibre connections are a challenge.

Fourthly, the management of the company should embrace the advances made in monetising technology and adapt to new approaches. For example, hybrid green energy and colocation with other network operators to power its sites would reduce 70 per cent of its monthly expenses. This is just one expense item.

Lastly, the government should procure the services of Telkom Kenya and pay for them regularly to help the company improve its cash flow.

I strongly believe Telkom Kenya can return to profitability and has more opportunities and market segments that it is strong in. The state corporation has huge fixed assets in terms of idle land and huge buildings that can generate money to enable it to modernise its telecom services.

Additionally, the company has a lot of unutilised or idle frequency spectrums that should be leased or sold. Besides, a strategic partner can help return the ailing firm to viability.

Mr Sheikh is a technology management and innovation practitioner. [email protected].