“The funds will come from our parent organization after the much awaited MTR that has given our board of directors confidence that government is going to uphold on the policies it had promised us when entering into this market,” Shivan Bhargava, the managing director of Airtel Kenya, told the Consumer Federation of Kenya (Cofek).
The funds come after HumanIPO reported that the country’s communication regulator the Communications Commission of Kenya (CCK) had lowered the Mobile Termination Rates (MTR) by 34 percent.
With MTR lowered to KSh1.44 (US$0.017) from KSh2.21 (US$0.026), Airtel Kenya, Yu and Orange expect to save on costs, considering that they have been paying up to 40 percent of their incomes to Safaricom as interconnection fees.
The mobile operators have indicated that they will be using the saved revenue to expand their networks and improve the data services.
“We intend to use the funds to increase our 3G network to enable us to tap into the youthful subscribers who are data-savvy and also to position ourselves in this market segment that is the next frontier for revenue generation,” Bhargava said.
Airtel Kenya has been struggling to make profits since launching in Kenya in mid-2010. The reduced MTR has revived the operator’s hopes in this respect, with Bhargava saying that they are looking at net profit-making in the next two years.
Other Kenyan telcos have not been left behind in acquiring funding for market expansion. Yu has already started looking for US$200 million from international investors, while Telkom Kenya (Orange) has already received KSh7.6 billion (US$90 million) from the Kenyan government and France Telecom (its major shareholders) to expand its data business.