Tuesday, October 7, 2008

Kenya opens door to foreign telecoms investors

Kenya will scrap a law requiring foreign telecoms investors to have local partners because it has choked funding for the fast-growing sector, the government said on Monday.

Previously, foreign firms that wanted to invest in telecoms projects in east Africa's biggest economy needed to find Kenyan partners who would own between 20-30 percent of any venture.

"This rule is messing us up in terms of investments. There are large companies which want to invest in this country without partnering with other individuals," Bitange Ndemo, permanent secretary at the Information Ministry, said in an interview.

"We must do everything to bring more foreign direct investment to this country," he told Reuters. He did not give a date when the change would come into effect.

Ndemo said the government was considering issuing another mobile operator licence in about 18 months time.

"We want those who are in place to recoup their investments, and at the same time we will study the market and see whether it is working efficiently," he said.

Kenya's Safaricom is the market leader followed by Kuwait's Zain. The only fixed-line operator, Telkom Kenya, which is majority owned by France Telecom, launched mobile operations last month under the Orange brand.

A fourth licensee, Econet Kenya, is expected to launch its service in November.

Ndemo said competition was driving down prices for consumers and encouraging providers to expand coverage quickly.

"That is why we predicted that in the next three years we would have more than 60 percent penetration rate, and that would be the highest in Africa," he said.

He said there were now 14 million subscribers in Kenya, out of a total population of about 36 million.