The entry of Starlink into Kenya has stirred up the Internet market, presenting one of the toughest competitions for Safaricom. The telco currently leads the fixed Internet market with a share of 37.4 percent as of March.
Safaricom chief executive officer Peter Ndegwa spoke to Business Daily on the telco’s initial feel of Starlink’s presence in Kenya, how the Internet market landscape looks like now, the prospects of partnering with satellite service providers, and how the firm is navigating the highly price-sensitive market without engaging in price wars.
How has the entry of Starlink into Kenya changed your take on the fibre market and the data business in general, in terms of growth projections?
Of course, there has been a lot of excitement by customers with Starlink’s entry into the market. You expect that with a new entrant with a new technology, which is satellite.
From an opportunity perspective when you look at the fixed Internet, whether you are using fibre or fixed wireless, there is a huge opportunity. There are about 60 Internet service providers in the country and so this speaks to the opportunity.
The reason there are so many players is because we all see the opportunity of the more than 10 million homes and businesses in Kenya, yet only around 15 percent are connected to reliable Internet.
There is a big opportunity for all players, and we all have a lot of work to do to make sure that we connect these customers and build towards our country’s digital transformation.
What is your take on investments in the satellite to spur connectivity?
We want to make sure customers have reliable mobile connectivity but also reliable fixed Internet. Three years ago, we carried out tests with AST SpaceMobile [US-based satellite designer and manufacturer] on how we could complement our investment with satellite.
We have millions of Kenyans who are in areas that are completely not covered, and satellite provides a cheaper opportunity to reach them on mobile. This is what we were testing with AST, and the tests were successful. We think it (satellite) will help us cover areas that cannot be commercially viable through fibre or mobile because of the level of investment needed.
You hinted at the possibility of partnering with Starlink. Could you expound on what form of partnership you are looking at?
Our view is that satellites should complement our investment rather than duplicate the investment we have already made.
We are open for collaboration with satellite providers. It could be Starlink, AST or any other provider. To the extent that we have places we have not covered, we should partner in the future with appropriate satellite providers, including Starlink.
But to just use satellites to compete in urban areas, frankly that will be duplication for us. We are still not at a stage where we can say we are partnering with Starlink but in the future, we don’t rule this out. We will only get into a deal when it complements our investment and also adds value to the experience and what we can give our customers.
You have ruled out price wars but the strategy of Starlink is more on lowering Internet costs. How do you avoid this in a market that is highly price-sensitive?
Our focus has always been on our customers. Pricing is a very important consideration but what we always look at is the overall proposition that the customer gets. To deliver the experience, you have to ensure you invest the right amount. If you just focus on low prices and fail to deliver experience, customers will walk away.
Instead of going in the direction of price wars, we took the decision to first sort out the experience (by increasing speeds), and then see how we can give our customers more value by increasing speeds. We have enhanced the speeds for homes and businesses.
Having competition is good because it helps us to sharpen and move faster. One of the areas that I can say we have seen from competition is the ability to deliver services faster. You can get the kit from a supermarket and set it up in a few clicks. We are now also working to address the customer journey and enable customers to get our 4G and 5G routers using an express journey from convenient locations.
Looking ahead, we also want to evolve our 5G for home and business plans from a bundle type to speed-based plans, which will also enhance the experience for homes and businesses outside areas covered by fiber.
You recently increased speeds for home fibre at no additional cost to customers. What informed the decision? How much room do you see in cutting prices while also getting value for your investment?
What we realised in the recent past is that there were instances where, on the fibre side, there were some issues to do with experience and value. We decided to resolve this. There have been numerous fiber cuts due to the construction boom, and from June to early September, we have had interruptions on the undersea cable providers.
One of our strategic goals is to turbocharge broadband and deliver the best in class experience. Therefore, as a baseline, the first thing that we must consistently do is deliver a great experience to our customers.
We did not increase speeds just because of Starlink, we were already seeing this as a huge opportunity to deliver a great experience for our customers. We also realised that with the base offer that we had, many customers were maxing out.
Our aim is to enable our customers to enjoy a digital lifestyle by ensuring they have a great experience with our products and enjoy value for their money. That is what we have worked to sort out so that our customers can see that we are there for them and that we are listening to them.
The first thing we did was to address the experience by increasing the capacity of our core transmission to be able to carry more traffic because if we did not work on the back end, customers would not be able to enjoy any change in speeds.
Data business is one of your fastest-growing business lines. What is your strategy for accelerating the growth momentum?
Our strategy is to drive the penetration of 4G-enabled mobile devices through our device-financing programme (Lipa Mdogo Mdogo), as well as the local assembly of affordable handsets through the East Africa Device Assembly Kenya Consortium.
The aim is to empower the millions of Kenyans still using 2G devices to access and reap the dividends of a digital world. We are also working to expand our 5G network and provide the right use cases, such as access to digital services, and content like entertainment, to encourage usage.
We are keen to provide digital literacy to demonstrate the opportunity of leveraging the Internet for access to markets, information, and connecting to people.
