As an under 55 year old basic Kenyan investor with at least a 12 month investment window desiring maximum returns from my investment,why would I buy into dollars (this late) for holding until the bottom arrives (assuming it hasn’t for counters I want) or even bonds (with double digit inflation) when I have the following information regarding AccessKenya and the ICT sector:



- The ICT sector has great prospects as it is set to grow by an estimated 60-65% during this future period whilst this company itself in its previous year grew by 65% making it one of the best growth companies listed on the NSE.



- AccessKenya products will become more competitive over the course of this period. Prices reduction estimates at 30-40%. Main players estimate internet costs could in the long run come down by 70%. As an example,the Access@Home broadband service currently with over 1,000 clients is set to be a key market product going forward.



- AccessKenya owns a 1.25% stake in the TEAMS fibre optic cable project. 1% is 10GB/Second worth of data. AK is reportedly seeking more stake on this profitable project. SEACOM reportedly will recover half their infrustructure costs in around 6 months of business with signed up operators. TEAMS,of which AK is a shareholder,with a large local consortium,will have guaranteed local traffic hence a regular revenue stream.



- AccessKenya will also buy capacity from SEACOM presumably for guaranteed availability/redundancy purposes.



- AccessKenya is laying a 150KM fibre optic cable in Nairobi at a cost of Ksh. 800M with half of that amount being covered by a 6 year NIC Bank loan. This loan has been provided regardless of the reduced lending in the banking sector. 92% of its current client base are corporates.





- AccessKenya has in this past week partnered with African Laughter to use content to help build demand for its core connectivity services by building the Kenyan online community. As an example,check out www.home.co.ke - its website expected to become the primary source of information about Kenya.



- The company owners Jonathan and David Somen have grown a previous brainchild,the LCR Telecom Group,from zero turnover to $50 million (Ksh. 4 Billion) taking it all the way to a NASDAQ listing in New York which they then exited. They have proven to be quite capable of increasing share holder wealth.





- David Somen (MBA Harvard Business School),a majority shareholder,currently heads the UK based company Virtual IT which is similar to AccessKenya. No doubt his experience in that market will come in handy as competition in this sector hots up.



- According to the MD,AccessKenya is confident in its own growth strategy and as a matter of fact is not accepting any buyout offers from larger players this year. It's growth will be delivered organically and by acquisitions.



NB: Accesskenya will payout a dividend of Ksh. 0.40/= per share on 18th June 2009.



In view of all of the above and the fact that AccessKenya has good liquidity (small cap) at the NSE,the incentive for capital gains on this counter and sector in the upcoming quarters is significant.



I would rather risk investing now,small and staggered as we head into the late June- early July fibre optic cable go-live and accompanying product launches,than keep my money held in dollars (Ksh 80 to the $$,too late) to invest in the future or bonds (assume minimum of 15% p.a. inflation).



In my view,I think any investor should seriously consider investing in AccessKenya now with a mid-long term view. OK,buy.



What about you? Why or Why not?

notes from my last friday bartalk..
AK is too official.. by this they have opened all their business to the government..so they pay taxes and follow the CCK regulations to the letter..come-on this is Kenya.. roam with your wireless device anywhere in the CBD,estates etc..there are atleast 5 providers and their price..wa!! almost 90% less of AK..so interms of market..Headed NOWHERE...coporate wise..they have the market..but i bet with TEAMs..safaricom will carry the day ie frm June\July.

now about the dollar trade..the Euro performs better..bought at 100 last week now at 108..this had made me one seriously broke idiot..goodtimes ahead.

muthomi mugi aiikagia maitho kabere...

..In that case....Access ought to focus on corporate segment of clientele..it's turf...coz Safcom is goin there too. All other factors remainin constant...Access is likely to pack more value per share in terms of growth in returns this year...as long as they do not keep diluting that value thro more share swap acquisitions. All factors remainin constant...on a per share basis. For investment....bond is less headache...no loose probables.

The race is not always to the swift..nor the battle always to the strong..nor food always to the wise..nor riches always to the intelligent..favor is not always to the skilled..or learned..but time and chance happens to all. Ecl9:5..

@ mlefu
With 92% of a corporate clientele,these corporates won't need new connectivity,they'll be willing to pay for more bandwith at an affordable price. The revenue per user will increase. This trend has already started in the past few months as reflected in their results and is set to continue unabated especially in the next 12 months.

The moment we require internet for more than gmail,yahoo and facebook,a cellphone may not suffice. Ironically,porn was a big hit in Korea when this technology landed there. in Kenya think of all those SME's that are currently not connected,the GoK's systematic move to e-government and our East African neighbours lingering in net darkness..who is best placed to make a foray into these areas?

@mlefu,would you run a serious enterprise that way? I'd agree with jammo on the need to retain and target corporate clientele. These provide a ready revenue stream that can only go up. The broadband deals that learning institutions have reportedly struck so far will reduce the need for the Kenyan youth to secure high speed connections at home.

Is MTN looking to get a piece of AK?

www.mjengakenya.blogspot.com

Those holding the dollar might want to keep their eyes on this little gem:

http://moneycentral.msn....arket_quote?symbol=TB6M

Either way,the Shilling is in a funk.

According to Kenya's 2009/10 budget read yesterday 11/06/2009,Internet Service Providers (ISP’s) can now offset taxable income against the costs of purchasing bandwidth for a period of over 20 years (i.e. cheaper internet costs for clients and ISP’s like Accesskenya can be more profitable at the same time). As competition for funds in the equity and bonds market hots up,this counter seems set to be a beneficiary.

Internet prices are set to tumble,thus the ISPs revenues are set to tumble by the same amount. Especially for corporate ISPs such as AK that will have to pass a bigger discount to its clients.
Yes they maybe more profitable (analyzing bandwidth only) but apart from their bandwidth costs i think all their other expenses will remain constant.
On top of that AK and other ISPs that have invested capacity in the fiber optic cables have committed respective amounts of cash per month for their share of the TEAMS / SEACOM cables,however,they have no clients to consume the total amount of bandwidth they have committed to purchase which would mean they would make less per MB / GB for the first couple of years as they ramp up their subscriber numbers. While they are still required by their financiers to repay the amounts they have borrowed.
The way i see it AK share holders better brace themselves for a significant drop in revenue in the next 2years or so and less dividends per share

Thats my 2 cents

Sometimes,threads like this make me so informative,that i wonder who i should pay.

Anyway,SK iko juu tu kaa Citizen TV.Long live such threads and their originators.