Telkom Kenya plans to raise additional funds by mid next year to boost its data market and cloud computing services — where software is delivered over the Internet — in the face of increased competition in the voice segment.

The firm’s first point of call will be its two shareholders, France Telkom which owns 51 per cent stake and the Kenyan government, said chief executive Mickael Ghossein.

Mr Ghossein added that the firm, which is also seeking to reverse its losses, is looking into other options such as local and international markets as well as financial institutions such as the International Monetary Fund.

Although he did not disclose the amount the company hopes to raise, Mr Ghossein said Telkom Kenya would include $40 million for investment in its 2012 budget — the same amount invested this year. The company invested $80 million each in 2009 and 2010.

“We are losing money. Our revenue is just enough to sustain our activities so when we invest we make a net loss. I hope it [raising funds] will be part of the 2012 budget,” he said.

Providing Internet and IT services such as storage space and cloud computing are key areas telecos are looking in order to shore up their revenues. The telkom sector has become increasingly competitive, especially regarding voice.

Mr Ghossein said that while subscriber numbers are growing, the sector’s revenues remain flat.

He said that out of an estimated $1 billion-$1.2 billion in revenue in the country’s telecom sector, Telkom Kenya accounts for about 8 to 10 per cent. Safaricom is the market leader with $0.94 billion as per the 2011 full-year financial results and also has the largest subscriber base.

The listed mobile phone service provider recently increased its calling rates by 30 per cent to cushion against rising costs.

But Mr Ghossein says he will not follow Safaricom’s lead. Telkom Kenya has maintained its local calling rates as it seeks to dislodge second ranked Airtel Kenya.

“My competitor is not Safaricom unfortunately. My competitor is Airtel. I would love to be number two. If Airtel is not increasing its calling rates, it will be a mistake for Telkom Kenya to do so,” said Mr Ghossein.
In the latest industry figures, Telkom Kenya’s market share grew to 10.7 per cent in June from 8.5 per cent in December having added 595, 555 subscribers, as Airtel’s stake dropped to 14.2 per cent from 15.1 per cent after shedding 177,000 subscribers.

However, Mr Ghossein said Telkom Kenya will instead review its international calling rates by mid-November to cushion against the weak shilling and increased calling rates in other countries, which raises the termination rates.

Mr Ghossein said the rates in India and Uganda for example, had risen, meaning termination rates for international calls had also increased.

“We will raise the international price because we also pay for our services in dollars. Someone is selling me traffic to India in dollars, traffic to the UK in dollars, traffic to Europe in euros...” he said.

International calling rates vary from as low as 3 US cents to India and China, some of the most popular markets for local business people. The UK, India, Tanzania and Uganda are among destinations for which Telkom Kenya will revise its rates.