Kenya Power & Lighting Company(KPLC) has indicated plans of offering fixed internet services by June next year, a move that will see the company compete with telcos hence triggering fresh price battles in the market.
For the past few months, KPLC has been piloting the fixed internet provision to a number of its corporate customers.
This new project will be a new business line for the state-owned utility if it successfully takes off as per the plans.
Speaking at the inaugural exhibition forum bringing together Kenya Power, manufacturers and technology firms yesterday, KPLC acting Managing Director, Geoffrey Muli, said that the company will launch the project before the current financial year elapses.
With the launch, KPLC will battle out with market leader Safaricom, the Wananchi-owned Zuku and other Internet Service Providers (ISP), steering high market competition.
Currently, KPLC has been leasing fibre-optic cables attached to its transmission lines to ISPs. Its entry into the fixed internet market will be an upgrade from this current model.
“Our plan is to launch our Lit Fibre business in the course of this financial year,” said Mr Muli
With over 7, 000 km of fibre cables that are attached to its power transmission line offering dark fibre services to the country’s and the region’s ISPs, KPLC boasts a wide network with a sea of customers.
The company will leverage these lucrative advantages over its competitors, unlike a normal new entrant into the business.
Competition and market assessment
According to the Communications Authority of Kenya (CA) data, as of September last year, Safaricom is the dominant player in the fixed internet market with a market share of 37%. Wananchi-owned Zuku follows with 29.2%.
Following the Covid-19 pandemic, demand for internet services and their use has grown over the past two years. The pandemic fueled online learning and remote working in a bid to suppress the spread of the disease.
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The CA says that the fixed internet market is largely unutilized. This indicates a good market gap, hence offering Kenya Power and telecoms firms a chance to grow revenues in this business sector.
In 2010, Safaricom parted with Sh421 million and secured a 20-year lease from Kenya Power for use of KPLC’s pair of fibre cables.
Similarly, KPLC penned deals with telecoms firms Wananchi Group and Jamii Telecoms, with each acquiring a five-year lease combined to a total of Sh403 million.
That revenue from selling data to its corporate customers will diversify KPLC’s income, hence helping it handle the challenges financial challenges facing the electricity division.
However, its entry into the fixed internet market will rattle the ISPs that have been riding on the Kenya Power network to sell data. The electricity distributor has a head-start in the race for rural areas in the country.
Financially embattled utility
The plans by KPLC to venture into this business comes at a time when the firm is grappling with electricity tariff cuts, a move that has hit the utility’s revenues.
In January, the government cut power tariffs by 15% in a bid to lower the burden of electricity bills to its citizens. The move is estimated to have dug a whooping Sh26 billion hole in the company’s books.
KPLC garnered a net income of Sh3.8 billion in the six months to last December from Sh138 million a year earlier. However, the 15% tariff cut will highly affect the full-year performance for the period that ended last month.