Altech has invested a further $39.5 million to increase its stake in Kenya Data Networks (KDN) to 60.8%, the company announced on Tuesday.
The technology company which previously held 51% stake said the capital injection will be used to roll out the KDN fibre optic network, increasing its footprint as the key provider of broadband in East Africa.
"The additional equity shares in KDN to be subscribed for by Altech will be non-voting, thus preserving the strong minority shareholder local influence in KDN through our strategic partners, the Sameer Group. This local influence is essential for retention of expertise and knowledge of the region," said Altech's CEO, Craig Venter.
Last week Altech and SEACOM announced a strategic alliance for the mutual acquisition of bandwidth capacity on two cable systems. The agreement sees Altech procuring two STM-16s from SEACOM (equivalent to 5Gbps) with the option to upgrade, within three years, to double this capacity, to an STM-64. The huge increase in bandwidth, through these undersea cables, is a major focus of Altech's strategy.
"KDN's fibre optic network and the undersea cables will provide more affordable international bandwidth to many East African countries, which, until now have been totally reliant on expensive satellite bandwidth. In addition, KDN will also provide centralised capacity management and cross border customer services," said Venter
To further compliment these expansionary aims, Altech and its co-shareholder in KDN, the Sameer Group have also invested an additional $7.5 million in KDN to build a data centre in Nairobi, Kenya. The data centre will offer disaster recovery, virtual application hosting, data and application backup, and an ethical hacking centre and data archiving facility to clients in the areas that will be connected by the planned undersea cables. It is anticipated that the data centre will be completed in approximately 12 months.
"KDN is in a strategic position to provide data warehousing services to East Africa and the Middle East with its access to the undersea cables. Under the Altech banner we now have end-to-end data service capabilities. Our strategic alliance with SEACOM and KDN's equity stake in TEAMS will supply ample bandwidth for KDN to supply additional services such as call centers, data centers and IP video on demand.
We have abundant terrestrial fibre linking the East African undersea cables to Kenya, Uganda and Rwanda; and also interests in various ISP's throughout East Africa, which take the cheaper and enhanced broadband service to the client. The data centre will add further services of data warehousing, disaster recovery and hosting to our Group's capabilities," Venter added.
KDN has established itself as the leader in provision of commercial leased lines, constituting 75% of Kenya's outbound traffic and currently provides the majority of the backhaul traffic for Kenya's three cellular network operators Safaricom, Zain and Essar. It boasts a nationwide Kenyan fibre optic network of over 4,000kms from Mombasa to the Ugandan border.
The network extends to Kampala in Uganda and to Kigali in Rwanda. KDN envisions that the network will soon reach Tanzania and the DRC. KDN currently has the largest WiMAX network in Africa with over 190,000 square kilometers covered. It has been offering turn-key solutions using the different technologies in its bouquet of Wi-Fi, WiMAX and fibre solutions across East Africa.
"Through Altech's TMT positioning, we are well placed to achieve overlapping and merging interests in our various businesses, as convergence gathers momentum. KDN is central to our strategy and our gateway to East Africa. Our further investment in this business, is evidence of our confidence that the continent and in particular East Africa is poised for massive growth," concluded Venter.