This week's East African says MTN has bought 60% of UUNET Kenya. How is this likely to affect Access Kenya?

'Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light,not our darkness that most frightens us.' Marianne Williamson

post-budget,the launch of the fibre optic cable in Kenya by the President himself this Friday resets focus back onto this sector. not a bad time to buy off speculators riding off this counters gradual climb...

Anyone who wants to bet against AccessKenya trading at Ksh 33/= least by March 2010?!!!

Always nice to get differing views....

you base your argument on the premise that since 'internet prices are set to tumble,thus the ISPs revenues are set to tumble by the same amount.'........

That is factually incorrect simply because the cost of delivering that internet to clients will be cheaper than has been the previous case e.g. at the most basic,AK is a co-shareholder on the TEAMS fibre optic cable! Additionally,many more industries e.g. advertising and media are considering exploting this new capacity unlike the current case..more recently...they can offset taxable income against the costs of purchasing any bandwidth.... BTW given the 'unutilised bandwith',clients can be given twice the capacity (the discount is from new capacity) for the same price...Being a leading industry player with huge capacity at hand,it remains a strong candidate for regional expansion and acquisition...capital expense is expected as is the case for hot growth companies..

The capital share price gains are far lucrative when compared with dividend payouts offered. In fact I say,I wish they could keep the entire 40% paid out for dividends for use in expansion and product development! Thats my 2 cents.


My friend,refer back to this counter in those 24 months you talk about.

@ ecstasy
Let me explain the background of my arguments:
1Mbps of international bandwidth cost the average ISP $1500 per month now and will cost the TEAMS / SEACOM partners about $ 200 per month for a long term lease of 10yr - 20yrs. So from month 1 of TEAMS becoming active AK will have committed to pay - > 1Gbps * 1024 (to make it into Mbps) * $200 = $204,800 per month.

These same bandwidth (1Mbps) would be sold now for $2000 on a guaranteed link (at one of the cheaper ISPs not AK). KDN has announced they will sell 1Mbps guaranteed at $600 once SEACOM becomes active.

Let me illustrate with an example:

AK has 40% of the corporate client (which includes some of the mass consumers of bandwidth) such as the media and entertainment companies you state. If 10 of them are on an Access Kenya link and take a 1Mbps now and pay over $2000 then once SEACOM becomes active they will expect to pay AK $600 or less or they take their business elsewhere. Thus Access revenue will tumble from $20000 to around $6000 ($14000 difference). Yes they have save on their bandwidth costs at $1300 per every 1Mbps which in the case of my example equals to $13000. Making their loss $1000 per month all things held constant.

However,what the above and your argument do not take into account is the spare capacity that any ISP including AK will be paying for and not utilizing. Yes they can give it to their existing subscribers but they WILL NOT earn extra money by doing that. Remember their monthly recurring $204,800 on bandwidth costs,so they have to make more than that on subscriptions.

The current method of sourcing for international bandwidth is VSAT (satellites) which are far much cheaper to install and maintain than fiber is prone to vandalism and damage (which by the way AK took a 400Million shillings loan to install)

With the weight of such a loan repayment,the previously illustrated reduction in revenues and assuming other overheads such as salaries,rent and licences remain constant,make me take cautious on the AK share for now.