Safaricom and Orange to Form Base Station Sharing Firm

Safaricom and Telkom Kenya Ltd have announced plans to form a jointly owned company to manage aand effectively share the tower resources between the two firms. Though a few of the telcos and ISPs have been sharing towers, this is going to be the first time an independent company is formed to only manage the base station resources between competing telcos.

The move is both strategic for Orange and Safaricom since the France Telcom owned Orange inherited the infrastructure of the former state corporation while Safaricom has been in the cellular business for the longest duration in Kenya and has built a modern infrastructure which will be of use to Orange.

Orange and Safaricom indicated that they were in advanced negotiations, expected to be concluded in the next three months, towards the formation of an independently-managed infrastructure company. The two companies own a total of over 4,000 base stations between themselves. It will be interesting to see how the arrangement works out because even a cell phone database sharing in the name of Porting Access Kenya is not really working out with claims of sabotage and counter sabotage witnessed left right and centre.

Initially, the proposed company will be formed between Telkom Kenya Ltd, Safaricom and a mutually designated professional and independent tower management company on agreed terms. Later, the consortium expects to invite other players into the company either as shareholders or customers on an open access model.

Details released by the two companies indicate that the new tower company will seek and operate on a separate Network Facilities Provider (NFP) license from industry regulator CCK in order to allow it operate on an open access model. The joint tower management company is expected to focus on leasing collocated tower space to anyone wishing to install wireless communication equipment and will also be involved in management of energy costs.

The two firms are expected to reap maximum cost management benefits from the formation of the new outfit not just in operational expenses (Opex), but there will also be significant savings to be gleaned in Capex (capital expendiiture) from the consolidation of future needs and joint network rationalization and rollout.