Kenya’s telecom firms are investing more in data services than telephony to reduce their reliance on the voice market, riding on the growing use of smartphones to access the Internet.

Over the past two weeks, Safaricom, the market leader and Airtel, its closest rival have made large investments in the data side of the business.

A new report by industry body GSM Association (GSMA) shows that Africa has become the fastest growing market for smartphones in the world. East African countries top the list of African nations where smartphones are increasingly gaining a foothold.

Kenya’s telecoms — Safaricom, Airtel, Essar (yu) and Telkom Kenya (Orange) — will, next year, collectively spend Ksh20 billion ($238.2 million) to expand their data services.

READ: Kenya to roll out $500m 4G network

Safaricom will put up a Ksh14 billion ($116 million) project to lay its own terrestrial fibre network across the country in January.

The company has already awarded the tenders to roll out the network to Eriksson and Huawei, and will set aside Ksh2.1 billion ($25 million) annually over the next five years for the project. The company aims to cover the whole country within that period.

In turn, Telkom Kenya has announced plans to increase the uptake of its 3G network by supplying low cost smartphones to maximise use of its data services.

Airtel Kenya, a subsidiary of Indian giant Bharti Enterprises, plans to inject Ksh8 billion ($95.2 million) to improve voice and data services. Essar’s yu, which currently operates a 2G network, said it is waiting for the government to collaborate with the private sector to roll out 4G network. This will determine the amount of money the company will invest in the project.

Last week, Airtel said it had partnered with Alcatel Lucent to increase the firm’s benefits from the increasing use of smartphones in its African markets.

In the agreement, Alcatel will supply advanced IP-based networking technology to support the delivery of high-bandwidth data and video services for Bharti’s consumers across 17 African countries.

The Sub-Saharan Africa Mobile Observatory 2012 report by Deloitte and GSMA indicates that mobile operators in Nigeria, Tanzania, South Africa, Kenya and Ghana invested $16.5 billion over the past five years, and $2.8 billion in 2011.

The investments have resulted in the number of base stations in these five countries going up by 250 per cent between 2007 and 2012.

A study by technology firm Cisco showed that smartphones have surpassed desktops and laptops as the preferred devices for completing work.

The report, released last week, states that 90 per cent of global youth check their mobile phones before eating, dressing or brushing their teeth in the morning.

“Africa is now the fastest growing mobile market in the world and will be home to 738 million handsets by the end of this year. The rise of smartphones has given millions of Africans Internet access for the first time, attracting new investments and innovations,” the GSMA report says.

For Safaricom, laying the cable could be a game changer. Though its data customers grew by 30 per cent to 5.6 million in the first half of this year, the company insists that there is room for improvement given that its 3G network is currently running under capacity.

“We are planning to introduce more entry level smartphones, which will be at least 20 per cent cheaper than the market level, in our efforts to boost mobile data uptake,” Safaricom CEO Bob Collymore said in an earlier interview.

Safaricom’s voice revenue grew by 19 per cent to Ksh37.4 billion ($445.2 million), while its non-voice services — which include M-Pesa and data — rose 28 per cent to earn Ksh18.7 billion ($222.6 million).

Essar’s yu is not sitting back. “We have received the approval of our shareholders to invest Ksh17 billion ($202.3 million) in the network upgrade over the next two years, which will include both voice and data services. We cannot ignore the fact that the mobile data service is a market segment that is growing at an incredible rate,” said yu CEO Madhur Taneja.

Telecoms analysts said high costs, poor coverage and unreliability of fixed networks across the region means that mobile broadband is the only way for the vast majority of consumers to access the Internet.

“Provision of efficient low cost bandwidth is the next big thing for mobile companies fighting to retain and earn new customers. Customers are using one network for call rates and another when it comes to bandwidth. None of the mobile companies have proved efficient in both areas,” said Francis Mwangi, an analyst at Standard Investment Bank.

The growing reliance on the mobile phone for Internet access has also seen mobile manufacturers up their game in the African market.

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Korean phone-maker Samsung told Reuters in an interview that it has flagged Africa as one of its biggest markets due to the growing demand for cheaper smartphones.

“We intend to grow the smartphone market up to 20 per cent for the next one year with the Galaxy Pocket,” said Kwang Kee Park, Samsung’s president and chief operating officer for Africa.

Finnish manufacturer Nokia has also brought in a number of mobile phone handsets, including its Asha series and the new Nokia Lumia, to meet the rising demand for smartphones.

ALSO READ: Smartphone revolution spreads across East Africa

“The smartphone market today is quite vibrant with consumers needs continuously evolving, and mobile phone manufactures are competing to meet these needs. That’s why we released our smartphone N3 recently,” Techno Group vice president Arif Chowdhury said.

By Charles Wokabi and Scola Kamau