Dwindling fortunes spell doom for Telkom Kenya

By Macharia Kamau

Telkom Kenya’s woes appear to be far from over as the struggling State-owned firm trails its competitors in major revenue generating areas.

The telecom firm has been through rough times in the past — from reports that it has been cash strapped and looking for a bail out from the Government, to Government ceding ownership in the telecommunications firm to France Telecom. And now, it seems that while other mobile operators are growing, Telkom Kenya is regressing.

Industry statistics released last week showed that while the firm has three million plus customers, they are just customers by name, as only a fraction of them are using the services that the company offers.

Telkom Kenya’s Orange Mobile had a customer base of 3.08 million subscribers at the end of the quarter to September 2011 — which was 28,000 less than the figure registered the previous quarter. The number of subscribers gave the firm a market share of 10.2 per cent.

But even the millions of customers are not calling, as the market share by subscription fails to tally with the market share by traffic. Telkom Kenya’s market share by traffic volume stood at 1.1 per cent, against its 10.2 market share by subscription.

Not active

“The market share by traffic for Telkom Kenya (Orange) does not correlate to the market share by subscription, implying that majority of the subscribers are not active and, therefore, do not make calls,” said a report from the Communication Commission of Kenya (CCK).

The company fixed line also saw its customers declining, with the total number of fixed lines going down to 248,300 from 262,711 lines recorded during the previous quarter.

The fixed line has been falling over the years and declined by a huge number in the year between September 2011 and September last year. In September 2011, there were 355,000 fixed line customers, but that number fell by over 100,000 to 248,000 in September last year.

“This decline may be attributed to cable vandalism as well as high maintenance costs for the copper line,” said CCK.

The firm, which was the only telecommunications company in the country before the year 2000, appears to have lost its footing, a fate further compounded by apparent disinterest from the State.

Further restructuring

The Government’s stake in the company fell from 40 per cent to 30 per cent after Treasury failed to inject Sh2.4 billion needed to maintain its stake. This saw France Telecom increase its shareholding in the firm.

Treasury has also been pushing for a further restructuring of the telco. Finance Minister Njeru Githae has in the past expressed concern about the abandonment of the fixed line by Telkom Kenya. The fixed line is seen as a major telecommunications asset that is more stable and reliable in delivery of services.