UPDATE 1-Econet Kenya to spend $500 mln on network
NAIROBI, Aug 21 (Reuters) - Econet Wireless, Kenya's third mobile phone operator, will spend $500 million on rolling out a network that it expects to be operational by the end of November, its chief executive said.
"This investment is about half a billion dollars over the first two years. In fact, we are well on our way to spending that money," Econet Wireless Chief Executive Michael Foley said late on Wednesday.
Majority owned by Johannesburg-based Econet Wireless International, which is in turn held by India's Essar, Kenya's Econet was scheduled to launch services in September.
It has received custody of 3 million numbers to start its project, Foley said, but declined to give projections for subscribers.
Econet faces massive competition from the market's dominant player, Safaricom (SCOM.NR).
"We have a huge challenge ahead of us. This is a monopoly, a very strong monopoly... (with) an ingrained position in the market, there is no doubt about that," Foley said.
Safaricom, partially held by a consortium led by Britain's Vodafone (VOD.L), had 11 million subscribers by mid June. Kuwait's Zain (ZAIN.KW) also runs a network in the east African country but has not offered much competition.
Formerly state-owned Telkom Kenya now majority held by France Telecom (FTE.PA) is also expected to take some market share.
But Foley says Econet -- which was awarded a licence in 2003 but failed to launch a service because of shareholder wrangles -- will offer Safaricom the best challenge.
"Price maybe a part of it but it is by no means the only thing we are going to be doing," Foley said.
"Increased competition will do a great deal for the whole industry. Safaricom is going to have growth out of this as well," he said.
Safaricom told Reuters earlier this month it expected the new entrants to slash its market share to about 60 percent from over 80 percent.
Foley said scrapping a 20 percent levy on handsets would help boost penetration levels above the 30 percent at the moment.
"We are nowhere close to saturation in East Africa or in Africa as a whole."
He said the firm was doing a study on whether to offer third-generation services or Wimax or a blend of the two.
Econet holds a 10 percent share of The East Africa Marine System (TEAMS), an undersea cable project that could be the first to deliver cheap broadband to the east African coast. Safaricom is also a shareholder in the venture.
Foley said data services would be the future of the industry.
"The arrival of broadband services here is going to be that sea change in the way you work, play, learn, do commerce. We are going to play aggressively in that market."
He told journalists Kenya would be Econet's hub for aggressive expansion into the region, into countries such as Uganda.
One of Essar's subsidiaries was looking into setting up a call centre in Nairobi for four languages including Swahili and Buganda, he said.
(Editing by Erica Billingham)
