Telkom CEO’s remarks on local telecom market not entirely accurate
SEE ALSO :Firm switches off Telkom over debtOn the other hand, Kenya’s standing as a lower-middle-income economy, together with variations in the country’s population and per capita income paints the market structure in the telecoms sector in a new light. According to consultancy firm McKinsey, Kenya’s telecommunications market is classified as “polarised,” alongside Ghana, Cameroon, and Nigeria among other markets. This means the market is characterised by a population of over 40 million people, with more than half of whom live in urban areas. Other market features, according to McKinsey, include “saturated mobile penetration with the potential of growth in the data market particularly in cities.” McKinsey states that polarised markets are also characterised by three to five mobile network operators and price wars with a high risk of thin margins due to overinvestment. At the same time, UK consultancy Analysys Mason, in a report on the state of competition in Kenya’s telecoms market, stated that the sector is “heavily concentrated” compared to other countries including Nigeria, South Africa, Ghana, Burundi, Rwanda, Uganda, and Tanzania. “Kenya’s mobile market has the highest Herfindahl–Hirschman Index (HHI) 13 of any country in the benchmark group, at 5082 out of a maximum of 10,000 at the end of 2015,” explained the report in part. The HHI measures the size of operators in relation to the industry and the level of competition within a market or industry.
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