 Major shifts are taking place in the Internet business as players position themselves to reap from the undersea fibre optic cables.
High interest in buying opportunities has driven industry top dogs like Safaricom, Zain, Access Kenya, and Wananchi Group to prey on small Internet Service Provider businesses in search of value buys. Infrastructure merchants like Kenya Data Networks, UUNET and Swift Global are also making strategic moves to have a grip on the market segment. So intense is the scramble for the small ISPs, which deal directly with end users, that they are projected to be swallowed up by the bigger players looking to broaden their revenue streams beyond corporate internet services and secure more infrastructure. The lower end of the market, where small ISPs have managed to survive on smaller profit margins amidst stiff competition are particularly vulnerable. They will be forced to operate within tighter profit margins and in order to survive, seek business friendly terms from large players who will own much of the bandwidth through equity ownership in the cable projects. The undersea cables will link Kenya to the rest of the world at cheaper rates compared to the current satellite connectivity. Two of them – SEACOM and TEAMs – are expected in June while EASSy – the third one – is scheduled for completion next year. The cables will be a watershed since the sector was fully deregulated six years ago with the end of Telkom Kenya’s monopoly, through Jambonet on international connectivity. “The metro fibre will give us the edge to provide better connectivity for our clients even as it secures us much needed infrastructure in coming years,” said Jonathan Somen, AccessKenya Managing Director. The company has spent Sh700 million on its metro fibre project. Internet business and access in the country has for a number of years remained a corporate affair with 80 per cent of the three million users being in Nairobi. The entry of the cables is expected to increase the number of Internet users to over 10 million in the next five years. The bigger cake anticipated from the faster and cheaper medium has attracted more players into the field in the last year, many seeking a front row seat in the inner circle. The corporate bigwigs have done little to hide their intentions with Safaricom last year spending Sh174 million to acquire One Communications. Safaricom is reportedly shopping for another Internet company to enhance its Internet offering as it targets higher revenues from its data division. AccessKenya upped the stakes on Tuesday with the acquisition of Saroti Solutions, a medium sized generator of business online. Satori will market AccessKenya internet services targeting Small offices and Home offices known as SoHo. This latest acquisition follows a previous one where it acquired Openview Systems, an IT service solution company. But these moves are unlikely to cause jitters among other larger players who have spent money and the last few months enhancing capacity to handle the high demand for Internet services the cables will elicit. For some like Kenya Data Networks, this has meant capitalizing on a metro fibre optic project that the firm hopes to leverage once international fibre arrives to provide connectivity to rural Kenya and neighbouring countries. To hook more users into its 3,500 kilometre pipes (the terrestrial fibre optic cables) it has been laying across the country, the company offers free Internet services and on net calls to subscribers using its Internet access based service dubbed the Butterfly.  The catch in enabling users’ access or post their locally generated content for free lies in them paying Sh2,900 per month for unlimited Internet access for any foreign content or commercial content.
While KDN will be charging Sh2, 900 for unlimited Internet access for those using the butterfly for commercial purposes and accessing foreign content like face book. Although it is an infrastructure company, it is taking the battle for Internet subscribers straight onto the door steps of the ISPS who have also to contend with the entry of mobile telecommunication operators into the segment. “We are targeting the small medium enterprises and home users with this product and definitely it will have great impact to other providers eying this market,” said KDN’s marketing manager Vincent Wang’ombe. Telkom Kenya is offering its Orange Internet wireless access service at one shilling per minute after a subscriber invests Sh3, 500 on a plug in and play modem. AccessKenya on the other hand charges a Set up fee (one time) of Sh12, 500 and a monthly access fee of between Sh4, 000 and 5,000 depending on speed. UUNET Kenya on the other intends to use the opportunity brought about by the cables to start offering television services via the Internet. The company has invested in Seacom and last year announced a Sh680 million network upgrade to help it take full advantage of the Seacom cable. The UUNET (K) Managing Director, Mr. Tom Omariba, said time for Internet Protocol Television (IPTV) and Digital signal Distribution is ripe as the sub-Marine fibre cables will guarantee high bandwidth capacity and better quality. Swift Global is banking on a franchising effort in its bid to cut operational costs by 20 per cent in order to maximise profits. Nick Odero, the company’s General Manager, said he projected the concept would increase the company’s countrywide footprint by 40 per cent. Africa Online already competes in the corporate and home markets and has been since its acquisition by Telkom South Africa been focused on expanding its network. “We are focused on offering a reliable last mile network that will enable the delivery of the Fibre Optic Capacity to the user at their homes and offices,” said Ken Munyi Africa Online CEO. The fibre cables are expected to spur a number of social and commercial activities in the country mainly due to the expected drop of the current cost of connecting to the Internet to a tenth of current costs. Higher bandwidthOne megabyte now costs Sh519, 168 ($ 6,500) per month but with the submarine fibre optic connectivity this is expected to fall to Sh33, 000 ($ 500) per megabyte per month.
This will greatly reduce the need to travel within and outside Kenya in search of business and services, including health and education. “With reduced access costs margins the operators are expected to pass the costs benefits to the end users. This means end users will access more bandwidth at current prices or even lower. Higher bandwidth means, faster speeds to the end users” says Muriuki Mureithi, an IT consultant with Summit Strategy. Mr Mureithi says that the price drop to end users will be notable when the country is connected with more than one undersea cable. “Market forces will make the operators change how they bill end users. Billing per second or per minute will not make economic sense” said Mureithi. Source: |
Archive for February, 2009
Firms scramble for share of Kenyan Internet market
Roubini says crisis end distant
Nouriel Roubini, one of the few economists who foretold much of the current financial turmoil, on his view that the banking and credit crisis is still far from over.
Source:
Reuters
Soros sees no bottom for world financial “collapse”
Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.
Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.
He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.
“We witnessed the collapse of the financial system,” Soros said at a Columbia University dinner. “It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”
His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.
Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.
“I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,” Volcker said.
Source:
Reuters
Teams cable secures operating permit
The East Africa Marine Systems (Teams) has been given the first submarine cable landing operator licence, opening the way for the country to tap cheaper high speed Internet connection.
The licence will allow the firm to convey international telecommunications traffic and provide connection to local Internet providers who have already placed cables across the country, said Communication Commission of Kenya Director General, Mr Charles Njoroge.
The firm paid an initial fee of Sh15 million, besides making an up front annual operating payment of five million shillings for the current financial year.
At the same time, the CCK approved the award of second licence to Sea Submarine Communications (SEACOM), but the firm will only get the green light to connect with local Internet providers upon paying the license fee of Sh15 million.
The twin submarine cables are now expected to land in Mombasa mid this year, a development that is set to spur shifts among the local Internet providers who are angling to grow their share of the lucrative Internet market.
Already, the local scene has witnessed acquisitions, price wars and creation of funding war chest among the players including AccessKenya, Safaricom and Telkom Kenya as they take positions to allow them grow their client base.
All this is being informed by the promise of cheap Internet, that is expected to spark an Internet use revolution in the country.
Source:
Feb 19, 2009 BDAfrica
Distance learning helps India address its voracious demand for managers
In the middle of a class on retail and trade accounting, Ayyalusamy Kanagaraj pauses to quiz a student about gross sales and closing book inventory. Mr Kanagaraj is teaching this class from the elite Indian Institute of Management in Indore, writes Amy Yee.
His students, however, are all over India. He springs a question on a student sitting in front of a computer in a New Delhi classroom. The young man squirms as Mr Kanagaraj presses him for an answer via microphone and headphone. “Do you have a short-term memory problem?” demands the teacher, whose image is simulcast on the computer screen from a studio on the IIM-Indore campus.
Fellow students sitting at the same table wear headphones that allow them to hear the rebuke. They chuckle and the young man laughs too.
Most of the 80 students in the class are sitting hundreds of kilometres away from Mr Kanagaraj in cities across India – from Hyderabad in the south to Kolkata in the west.
But there is still no escaping the long arm of IIM-Indore’s notoriously strict teachers thanks to a sophisticated distance learning network of computers, nimble software, webcams, headphones and microphones.
This virtual classroom is part of NIIT Imperia, the new management education division of NIIT, the education giant that pioneered computer training in India in 1981.
Over the years, NIIT has helped supply manpower for the country’s booming IT industry and now teaches 500,000 students in a variety of fields at 3,000 centres worldwide.
With the help of technology and distance learning, NIIT and others in India are racing to train more managers and educate students in order to satisfy the country’s voracious demand for skilled workers. In spite of a vast population of 1.1bn, India has a shortage of qualified workers that is readily cited as one of the country’s biggest challenges for maintaining economic growth. Teachers are scarce at all levels and there is a dearth of reputable higher education institutes.
As new industries take off, business schools are struggling to keep up with demand for managers – there are not enough high-level institutions. About 300,000 students take the highly rigorous exam for entrance into India’s seven Institutes of Management but only 1,700 are admitted.
NIIT Imperia, launched in 2006, has partnerships with the Indian Institutes of Management in Ahmedabad, Kolkata, Indore and Lucknow as well as the Institute of Management Technology in Ghaziabad and the Indian Institute of Foreign Trade in New Delhi.
Tutors from these institutions remotely teach students at 19 NIIT centres across India who must first pass an entrance exam.
The courses taught last from four to 18 months and usually entail three-hour evening classes twice weekly that cater to working professionals.
When they finish, students receive certificates in management, strategy, marketing and other disciplines.
Biju Madhavan, a 29-year-old revenue manager for Indian hotelier Park Hotels, is enrolled in a course on sales and marketing.
Full-time business school was not possible for Mr Madhavan who has a wife and baby to support. But he says NIIT Imperia allows a “great opportunity for working students to get in touch with premium institutes”.
This year, NIIT Imperia plans to enroll 3,000 students, compared with 700 last year. So far, it has 2,200 alumni.
Distance learning in India has taken other forms too. In 2003, all seven of the elite Indian Institutes of Technology, along with the Indian Institute of Science began digitising their science and engineering course materials to disseminate knowledge beyond their own campuses.
This government-backed National Programme on Technology Enhanced Learning (NPTEL) sought to set up a digital library and create online and interactive programmes.
So far, 5,000 hours of lectures on science and engineering have been recorded. The NPTEL originally wanted to broadcast lectures on Indian government television channels.
“But TV has the disadvantage of being restrictive. It’s not video on demand,” says Mangala Sunder Krishnan, a chemistry teacher at IIT-Madras and web courses co-ordinator of NPTEL.
Through a partnership with Google, NPTEL has posted 3,500 hours of lectures on YouTube – and it has now become the most popular channel on YouTube India, surpassing even Bollywood videos.
Source:
FT
Oil’s impact on African growth
The price of oil has fallen more than $100 since its high of just over $147 in July last year. The sharp drop in the oil price could put the brakes on growth for African oil exporters like Angola and Nigeria.
With 90 percent of Angola’s income stemming from oil and 80 percent of Nigeria’s government revenue generated by oil – the sharp drop in the price could mean these oil-rich countries will take a lot longer to improve their infrastructure to attract foreign capital.
Samantha Loring spoke to Duncan Clarke, author of Crude Continent, about how the drop in the oil price has impacted growth prospects for African oil exporters.
Source:
CNBC Africa
Investment Opportunities in Africa
Infrastructure, including energy and water, is an area of opportunity for investors interested in Africa. Katharine Pulvermacher, CEO of African Rainbow, goes into detail as to why Africa presents these opportunities.
Source:
CNBC Europe
Click to watch Video:
Tools: Investment Opportunities in Africa
New Index for Investors Wanting to Tap Into Africa’s Multi-Billion Pound Market
- Star of AfricaTM index ranks countries by investment potential
- Africa provides wealth of opportunities despite global recession
- Ethiopia provides second largest investment opportunities, after Nigeria
A new index, ranking each of Africa’s 53 countries in terms of investment potential, launches today. The Star of Africa(TM) is a weighted index based on governance and social capital as well as Africa’s electricity, water (supply, sanitation and irrigation), internet and telecommunications sectors.(i)
The index is launched by African Rainbow Consulting, which provides intelligence briefings on doing business in Africa. It is designed to help investors and entrepreneurs to establish which countries offer significant risk or opportunity for successful long-term investment.
Topping the index is Nigeria, which, despite its poor governance score, offers significant scope for improvement in access to water, electricity and ITC infrastructure. Ethiopia ranks second, based on its potential for better countrywide access to water and electricity.
Somalia, Eritrea and Chad provide the least attractive investment opportunities due primarily to low scores on the governance and social capital scales.
Katharine Pulvermacher, Chief Executive, African Rainbow Consulting, comments:
“Africa represents a market of a billion people. Eighty per cent of Africans live in rural areas, many without access to what most of us consider basic amenities. Significant and highly profitable business opportunities exist in the continent. If these are maximised, the result will be improved African living standards and a boost to economic growth.
“But while many people in the west would like to contribute to development in Africa without giving aid, there is very little reliable information available to potential investors on where the opportunities lie and the risk involved. The Star of Africa(TM) is designed to address this.”
Some of the major opportunities available include:
- An estimated 497 million people need access to electricity.
- 47% of Africa’s energy use is sourced from biomass, much of which is inefficient and environmentally destructive.
- 600 million potential customers are waiting for access to improved sanitation.
- Over 36 million hectares in Africa are suitable for irrigation, but are not actually irrigated.
- 628 million Africans do not have mobile telephone subscriptions.
- Only 6% of Africans use the Internet.
(i)Star of Africa(TM) Index explained:
The Star of Africa is based on five key indices:
1. Energy Index: calculates the potential market size in each country in terms of megawatt hours.
2. Water Index: outlines potential for improving access to sanitation and clean water, weighted by population size.
3. ITC Index: maps potential markets for mobile telephone and internet use, PC ownership, factoring in market competitiveness.
4. Social Capital Index: yields insight into population’s health (40%), education levels (40%) and demographics (20%)
5. Governance Index: rescaled aggregate of World Governance Indicators, covering issues such as corruption, violence, rule of law and ease of doing business.
About African Rainbow Consulting
African Rainbow Consulting provides intelligence briefings on doing business and investing in Africa. With an emphasis on social entrepreneurship, the company focuses its analysis on key sectors that are crucial to long-term, sustainable development:
- Telecommunications and internet
- Irrigation and sanitation
- Electricity generation
The organisation was founded to provide investors and businesses with interests in Africa, with clear, easy-to-access, well-researched information on its 53 countries. It is independent of any political party or financial institution, and believes that good information is the basis of sound investment, investment being the key to lifting people out of poverty permanently.
Reports are compiled based on both desk research and regular field visits to each region in Africa. African Rainbow’s network of contributors includes staff from African universities, government departments, international organisations, NGOs and others who are stakeholders in Africa’s future.
Services offered include country briefings, country reports, personal briefing sessions, sector focus reports and bespoke consultancy.
Source:
Feb. 18, 2009: Marketwire
Cellphones tap wisdom of the crowds
DAVID, a Masai herdsman from Kisumu in Kenya, answers a call on his cellphone. After listening to the message, he repeats a short phrase in his Masai dialect. He then listens to another short message, and repeats the new phrase. After 30 minutes, he ends the call, having earned enough for a week’s worth of personal cellphone airtime.
David is working for txteagle, a service that allows rural Kenyans to earn airtime and money by performing small tasks such as translation and transcription using their cellphones.
The service is based on crowd-sourcing, which relies on the power of thousands of people, each carrying out small tasks, to help solve much bigger problems. The idea is that while computers are very good at many tasks, there are still some activities, such as translation or image analysis, at which humans thrash them.
Cellphones are a lucrative opportunity for people living in rural Kenya (Image: Nathan Eagle)
Nokia, for example, wants to provide cellphone interfaces in the 60 or so languages spoken in Kenya, but lacks the linguistic know-how to do so. So the company has begun using txteagle to recruit Kenyans to translate English words into local dialects. Contributors are sent text messages with the English words that need translation. The same word or phrase is sent to multiple users, and if a high percentage of people return the same answer, it is accepted by the system, says Nathan Eagle, founder of txteagle and a cellphone technology researcher at the Massachusetts Instituteof Technology.
The service rewards those who are correct more often than not by paying them at a higher rate. That is because the more trusted the contributor, the fewer redundant translation requests txteagle has to send out, saving it money.
Other applications for txteagle are also being developed. One involves training speech-recognition engines by asking people to listen to a phrase and then speak it back, to provide the software with examples of different accents and the many ways words can be pronounced. Another is transcribing speech into text: a user listens to a fragment of speech, transcribes it and sends it back as a text message. “There is such a huge market for medical transcriptions,” says Eagle. “If we can enable individuals living in villages to start doing that work, it would be a huge thing.”
He estimates that if the transcription service takes off, contributors could earn $3 to $4 for each hour’s work, a substantial amount of money in rural Kenya.
Paying people for their services in rural Africa – where there is no extensive banking or internet infrastructure – needed some innovation. This came just as Eagle was developing txteagle. Kenyan cellphone company Safaricom had a scheme in place which allowed people to exchange cellphone airtime in lieu of currency. “At the market, I could pay for my groceries by transferring airtime,” says Eagle.
Buoyed by the scheme’s success, in early 2008 Safaricom created M-PESA, a mobile banking system that allows people to transfer money between M-PESA accounts using their cellphones. The money can be cashed at post offices.
In no time, Safaricom became one of the largest banks in east Africa and Eagle was able to pay txteagle contributors by crediting their M-PESA accounts. Later this year, he hopes to expand the service to countries such as Rwanda and the Dominican Republic. He also hopes to extend it to people who cannot afford a cellphone, by allowing community phones to be rented by people completing txteagle tasks.
That is, of course, if the scheme ultimately proves successful. Tapan Parikh, who investigates the use of computing to support economic development at the University of California, Berkeley, thinks txteagle is “a great model”, but he cautions that providing good quality translation and transcription within the limits of short text messages will be a challenge. And while Kenyans benefit from access to the M-PESA bank, “it’ll be interesting to see how the model works in places where such payment mechanisms are not in place, or where regulations prohibit it.”
But Raffi Krikorian, of the crowd-sourcing service Wattzon (see “The wisdom of crowd-sourcing”), says txteagle has a great opportunity to change the economic and telecoms landscape of east Africa.
Source:
newscientist
China’s car industry overtakes US
New figures have shown that in December, for the first time ever, there have been more cars sold in China than the United States.
A total of 735,000 automobiles were sold in China last month, compared to 656,976 vehicles were sold in the US.
The reason, analysts say, is that the slump in sales in China has been less severe than the slump in the US – not exactly a cause for celebration for carmakers here.
But the truth is there are worse places to be in the car business than in China at the moment.
It’s one of the few places in the world where if you visit a car showroom you’ll meet a steady stream of customers.
American appeal
Car buyers like Tang are still attracted to US brands
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At lunchtime in one in Shanghai’s Pudong district, Tang Liang, a gangly young man is being shown a large family car made by the US firm General Motors and its Chinese partner.
The salesman is assiduous, answering all his questions as Tang jumps in and out of the vehicle, clearly impressed by how it feels to sit in the driving seat.
“We’re all quite tall in our family,” he says. “Small cars aren’t that comfortable.”
So why is he interested in buying an American car? “I long for America,” he smiles. “Its democracy. Its cars.”
He’s laughing, but he’s not joking. He’s impressed by the car.
Above him is a flag with an American eagle.
To those Chinese who can afford them US models are often more attractive than the cheaper, local alternatives, says Wu Ai Lian, the local sales manager.
Her branch sold nearly 1600 cars last year.
“Business isn’t bad,” she says. “GM has been number one in China for many years. People think their cars use a lot of fuel but we tell them they’re safer. Nothing is more valuable than your life. American cars might use more fuel but they’re good quality.”
Major event
Sales are still holding up, says Wu Ai Lian, manager at a GM dealership
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The streets of Shanghai are crammed with cars.
The markets for cars in the bigger cities are well developed.
There are fourteen showrooms selling the same model Tang wants in Shanghai alone.
But across the country, in the smaller cities and in the countryside, it is very different.
Car industry analyst Yale Zhang points out that in the US there are on average 800 cars for every 1000 people.
Here in China the figure’s a tiny fraction of that – just 20 per 1000 Chinese.
Mr Zhang says for most Chinese buyers, the purchase of the car is still a major event. ”
“Over 80% are buying their first car,” he says.
“It’s not just a simple transportation tool as it is in the US or in Europe. Here it tells people your social status.”
Fast-growing market
China has been regarded as the fastest-growing automobile market in the world, with sales growth of over 20% per year for three years.
But last year growth slipped back to 10% after a disappointing third and fourth quarters.
GM hopes to grow its Chinese market strongly in the next few years
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Nowhere is immune to the effects of the economic downturn.
This year sales in China are predicted to slow to just 5% – half of last year’s figure.
Kevin Wale, the President of General Motors China, smiles as he admits that the months ahead are going to be “somewhat more challenging.”
But he insists that those who’ve been in the car industry for a long time would recognise that any time you have a growth market is a “good year”.
He’s not surprised that China is challenging the US for the top spot in car sales worldwide, although he believes it will be “sometime between 5 to ten years” before China outsells the US on a regular basis.
However, higher sales numbers do not necessarily translate into higher sales value in cash terms.
“The value of those sales in the US is on average far higher than the value of those sales in China, so the revenue generated in the US market will be significantly larger than that generated in the China market for quite some time to come,” he points out.
Rocky time
Car analyst Zale Yang thinks the next few months will be difficult for many of the smaller players in China’s car industry.
“China has enjoyed this more than 20% growth for too long,” he says, “and people in the industry have got too used to it.”
“If it slows down to single digits, it will add a lot of difficulty for many smaller carmakers in China.
“We have very good reason to expect that by the end of this year or early 2010 we will see some of the smaller manufacturers leaving the industry.”
Measures to help manufacturers and motorists have been introduced by the Chinese government in recent weeks.
Among them, the tax on vehicles under with smaller engines (less than 1.6 litres) has been halved to 5%.
And there are subsidies for those who want to exchange an old vehicle for a new one.
Some analysts believe that the stimulus package could boost sales by between 3% and 6% this year.
The government has also promised to provide 10 billion yuan (£980m, $1.4bn) to help carmakers upgrade their technology and to develop alternative energy sources for cars and trucks.
But it acknowledges more help might be needed to support its car industry in the months to come
Source:
BBC Online