Struggling Kenyan telecoms opera- tor Telkom Kenya has contracted UK- based Pan-African firm Eaton Towers to manage its passive network infrastructure in an effort to cut costs.
The operator, which is owned by France Telecom and the Kenyan government and is struggling to remain afloat owing to massive debt and dwindling business, contends the deal with Eaton will help reduce operating costs and capital expendi- ture, besides improving network coverage and quality.
“The partnership will place us in a strong position to expand our network and develop innovative new services,” says Telkom Kenya CEO Mickael Ghossein.
Under the agreement, Eaton will take over management of over 1 000 towers belonging to Telkom Kenya and will also invest in passive infrastructure upgrades and build new towers to provide the company with improved coverage and network quality. The agreement is for 15 years.
“Eaton Towers’ expertise in tower management and its commitment to top-quality service will allow Telkom Kenya to expand and improve its network while optimising costs,” says Alan Harper, Eaton Towers CEO.
Although the two companies have not disclosed the value of the deal, the transaction comes at a time when Telkom Kenya has plunged into a financial mess. It has petitioned its shareholders for a $70-million capital injection to offset part of its debt, totalling over $300- million, and cover operational costs for 2013.
Last year, the Kenya government and France Telecom pumped a staggering $125-million into the company to avert a liquidity crisis.
The coming on board of France Telecom in 2007 has turned out to be an expensive affair for Kenyan taxpayers. While government spent more than $1-billion of taxpayers’ money to prepare the company for privatisation, including retrenching over 15 000 employees, the company continues to be lossmaking.
In 2011, Telkom Kenya suffered a record net loss of $211.6-million.
The company continues to feel the pressure of stiff competition in the tele- coms industry, with industry statistics showing that although the company has three-million subscribers on its mobile network, only about one-million are active.
The company’s fixed-line business saw its customer number decline to 248 300 in September last year, compared with the previous year’s 355 000. Over the years, the firm has experienced growth only on its data services.