Kenyan ICT companies have shied away from listing on the Nairobi Securities Exchange (NSE) citing under-appreciation of technology stocks. AccessKenya Group is the first publicly listed ICT company in the East African nation. Jonathan Somen, co-founder and managing director of the data and IT services provider, told How we made it in Africa’s Dinfin Mulupi about listing on the NSE, dealing with competition from mobile operators, and the firm’s overall strategy.[hidepost=9][/hidepost]
Leading technology companies have been resistant to list on the NSE, arguing that technology stocks are not well appreciated locally. What are your thoughts on this?
I believe the whole market was down during the past year because interest rates were so high in Kenya that most investors pulled out of equities and put their money into Treasury Bills (T-bills) or banks for higher returns with low risk. That said, I believe that our own share was, and is, undervalued compared to the growth and performance of the company.
What is AccessKenya doing to solidify its presence in the market and ward off competition?
We continue to focus on providing the most reliable service with the best customer service for excellent value for money. In addition, we are investing heavily in our fibre network infrastructure as well as our own network coverage nationally. This year we will roll out 10 more towns across Kenya which will be connected to our own infrastructure. This will give us full control of the network in these new towns and we therefore won’t have to rely on third parties. We are also aggressively rolling out new value added services with a particular focus on the financial sector and the customers who have national presence.
As an internet service provider, are you concerned about the rapid growth in the use of internet via mobile phone devices?
On the contrary, we are very happy about it. Mobile phones are an excellent entry point for customers wanting to have their first taste of the internet. It is also a low cost, simple entry point. As customers become more discerning about the service they require, the guarantees they want and specifically the reliability and customer service, they then move to an improved product and we hope they choose ours. The Kenyan internet fraternity growth is good for all players as it is creating more demand for services and more scale that is to the benefit of all industry players and ultimately also to the benefit of consumers. We found in 2012, and in fact previous years too, that we more than held our own against all our mobile competitors and, in fact, grew our market share in our segments against all those operators.
What challenges do you face?
Our challenges include managing out network for growth, managing poor power infrastructure and ensuring we maintain our high standards of service. We also face challenges from competition and our aim is to continue to keep ahead of them by providing better services than they do. We always watch what our competition is doing very closely.
We are also seeing some corporate firms building their own fibre networks. Is this a concern to you?
There is inherent growth in the market. I believe that every business doubles its internet capacity requirement every 18 months. There are very few corporates who are building their own networks. These are mostly firms that have two offices that are 100 metres apart and it makes sense for them to build their own network. I see no corporates in unrelated industries (not ICT) that are building their own. The market is growing very fast and demand is continuing to rise and that matches what is happening in the rest of the world.
AccessKenya has recently invested hundreds of millions in network expansion. Is this paying off and do you intend to make more investments?
Absolutely, we do. We have spent wisely to build out the best infrastructure in Kenya and there is still much to do and much to continue investing in. Our network is a key asset for us and a key driver of our growth and profitability. We will continue to invest heavily. In 2013, we expect to connect 120 new buildings to our fibre network and we will spend about US$1.3 million on fibre expansion alone. This will include some fibre expansion in Mombasa and also in a few other towns.
What lessons have you learnt in business and what’s your advice to upcoming entrepreneurs?
I have learnt very many lessons, but key for me is focus. Focus is vital to ensure your eye is always on the ball for your biggest wins. It is important to focus to ensure that you don’t get sidetracked into doing new products and services when you are not yet ready to take them on. Early stage entrepreneurs should ensure that they don’t start a business because they want to start one, but to ensure that they start a new business with the right concept and idea. The idea is key. Once you have that, execution – one of AccessKenya’s key internal focuses – is critical. Be brave.
What are the future plans for AccessKenya and where do you see the company in five years?
Our projections for 2013 are for further growth in the business in terms of revenues, customer numbers and profits. In 2013, we expect to connect a further 120 buildings to our fibre network. We want to continue to be the market leader for corporate data and we intend to grow and enhance our offering further with our IT services. We are not resting on our laurels and we continue to expand, to invest, and to raise the benchmark that we are setting in terms of reliability and service.