Just days after Altech CEO Craig Venter earmarked Kenya over South Africa as a key growth point, the company has increased its stake in Kenya Data Networks (KDN) from 51% to 60,8% – an additonal investment of $39,5-million.
The capital injection, it says, will be used to roll out the KDN fibre optic network, further establishing KDN as the key provider of broadband in East Africa.
As reported on IT-Online last week, Venter said at a joint Seacom/Altech press briefing that one of the reasons Kenya was a key focus for the group was the ease of doing business in that country.
"Not to be too critical of South Africa, but obtaining licenses and working with the regulators in East Africa has been extremely refreshing," Venter said at the briefing.
He revealed that its investment in the region was already paying dividends, contributing over R100-million to profits last year and on track to contributed about R240-million this year.
Venter also stated that Altech's East African operations could account for 45% of group profits within the next couple of years. It currently contributes about 20% of group profits.
The latest investment is obviously indicative of the group's intentions in the region.
“The additional equity shares in KDN to be subscribed for by Altech will be non-voting, thus preserving the strong minority shareholder local influence in KDN through our strategic partners, the Sameer Group," Venter says. "This local influence is essential for retention of expertise and knowledge of the region.”
It is said that the recently launched African East Coast undersea cable, Seacom, and in future other undersea cables like TEAMS, will change the face of communications in Africa. The huge increase in bandwidth, through these undersea cables, is a major focus of Altech’s strategy.
“KDN’s fibre optic network and the undersea cables will provide more affordable international bandwidth to many East African countries, which, until now have been totally reliant on expensive satellite bandwidth," Venter says. "In addition, KDN will also provide centralised capacity management and cross border customer services.”
To further compliment these expansionary aims, Altech and its co-shareholder in KDN, the Sameer Group have also invested an additional $7,5-million in KDN to build a data centre in Nairobi. The data centre will offer disaster recovery, virtual application hosting, data and application backup, and an ethical hacking centre and data archiving facility to clients in the areas that will be connected by the planned undersea cables. It is anticipated that the data centre will be completed in approximately 12 months.
“KDN is in a strategic position to provide data warehousing services to East Africa and the Middle East with its access to the undersea cables," says Venter. "Under the Altech banner we now have end-to-end data service capabilities. Our strategic alliance with Seacom and KDN’s equity stake in TEAMS will supply ample bandwidth for KDN to supply additional services such as call centers, data centers and IP video on demand.
"We have abundant terrestrial fibre linking the East African undersea cables to Kenya, Uganda and Rwanda; and also interests in various ISP’s throughout East Africa, which take the cheaper and enhanced broadband service to the client," he adds. "The data centre will add further services of data warehousing, disaster recovery and hosting to our Group’s capabilities.”
KDN has established itself as the leader in provision of commercial leased lines, constituting 75% of Kenya’s outbound traffic and currently provides the majority of the backhaul traffic for Kenya’s three cellular network operators Safaricom, Zain and Essar. It boasts a nationwide Kenyan fibre optic network of over 4 000kms from Mombasa to the Ugandan border. The network extends to Kampala in Uganda and to Kigali in Rwanda. KDN envisions that the network will soon reach Tanzania and the DRC. KDN currently has the largest WiMax network in Africa with over 190 000 square kilometers covered. It has been offering turnkey solutions using the different technologies in its bouquet of Wi-Fi, WiMax and fibre solutions across East Africa.
“Through Altech’s TMT positioning, we are well placed to achieve overlapping and merging interests in our various businesses, as convergence gathers momentum," says Venter. "KDN is central to our strategy and our gateway to East Africa. Our further investment in this business, is evidence of our confidence that the continent and in particular East Africa is poised for massive growth.”