Afsat merges with AfricaOnline- Kenya

AFSAT Communications Ltd and Africa Online are set to merge in a deal that will give its South African parent company a strong footing in the Kenyan market.

Afsat Communications was formed in 1992 to provide high‐end satellite broadband solutions for the African Market. Afsat is headquartered in Nairobi, Kenya, with its subsidiaries in Tanzania, Uganda, Kenya, Nigeria, Zambia and offers its service through a network of 41 distributors in 30 countries across the Sub‐Saharan Africa continent. Afsat is part of Mweb Africa, a member of Telkom Group.

A provider of internet services on the continent and a subsidiary of the African Lakes Corporation, Africa Online’s coverage extends to Kenya, Tanzania, Uganda, Ghana, Ivory Coast, Namibia, Swaziland and Zimbabwe.

According to Smart Company, Afsat Services Ltd Managing Director Dawood Shah said the merger was awaiting regulatory approvals in Kenya and the countries in which the firms operate.

Already, Mr Shah said they have received the green light from the Kenya’s Monopolies and Price Commission.

After the merger, each will continue with its operations, but will be managed from the head office to be based in Nairobi.

The aim of the merger, according to Mr Shah is to bring satellite and fibre into a one stop shop.

“This will enable us harness hybrid solutions and allow us to provide connectivity solutions irrespective of whether it is VSAT or terrestrial,” said Mr Shah, who has already moved to Africa Online office at Landmark Plaza in Nairobi in readiness for the restructuring, said.

“At the moment we are learning from each other as we wait for regulatory approvals,” he added.

Afsat has been predominantly a satellite broadband provider and according to Mr Shah, satellite will still play a critical role in internet.

“Satellite is much more for people and companies who want high reliability, consistency, speed, availability, and strong support. And with cable vandalism all over, companies where internet is critical cannot retire satellite easily,” he says.

The arrival of fibre optic cables has not eliminated all connectivity problems.

Connectivity in East Africa was disrupted recently by damage to the SEA-ME-WE 4 cable in the Mediterranean.

“We know fibre can carry a lot more capacity in terabytes compared to the limited satellite; however that does not mean satellite has no place,” Mr Shah said.

However, he reveals that satellite broadband uptake has been slower. He says since the entry of fibre optic cables, they have seen about 10-12 per cent of clients in satellite moving to other technologies.

He says even in the US, the most wired country in the world, satellite is growing by 19 per cent annually while terrestrial grows at 0.5 per cent.

Telkom South Africa is focusing on achieving strong growth through both organic and acquisitive business development strategies, as well as by ustilising synergies across the group. Telkom SA also has a stake in UUNET, another ISP with a presence in Kenya, expected to rebrand later in the year.

In 2004, Verizon South Africa bought UUNET Africa including the Kenyan subsidiary.

However, in 2008, South Africa-based mobile operator MTN bought 100 per cent of corporate internet service provider Verizon South Africa, which was owned by US-based Verizon Communications (70 per cent) and local group Jay & Jayendra (30 per cent).

Later, MTN (60 per cent) and Telkom South Africa (40 per cent) in a joint venture formed SDN Mauritius that took over 70 per cent of UUNET Kenya.

The other 30 per cent is held by local shareholders to satisfy the Communications Commission of Kenya requirements.

By BRIAN ADERO in Nairobi, Kenya