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Kenya to start building 4G Internet network next year

NAIROBI, April 1 (Reuters) - Kenya will start building its fourth generation (4G) Internet network next year and is open to talks with operators on the best roll-out model, its telecoms minister said on Tuesday.

The east African nation of 40 million people wants to launch the 4G high-speed broadband network as part of efforts to raise the Internet's contribution to economic growth to 10 percent in 2017 from 2.9 percent this year.

The government has proposed a private public partnership wholesaling model, where it partners with investors to build the network and sell capacity to operators, to ensure open access to the spectrum. But operators like Safaricom, the country's biggest, want an auction of the spectrum to existing operators.

"We are open to business. We are open for discussions," Fred Matiangi, the minister for Information Communication Technologies (ICT), told Reuters.

Some of Kenya's mobile operators are struggling to cope with a vicious pricing war that has lasted for more than three years and is forcing some out.

Essar Telecoms' Yu Mobile is exiting the market due to losses and the smallest operator, Telkom Kenya, controlled by French telecom firm Orange SA, has said it is reviewing its business.

Struggling operators may find the going even harder once 4G is rolled out, as they will be required to put in significant investments, to offer consumers faster Internet.

But the minister said he was confident the plan to roll out 4G would go ahead and individual operators would adapt their strategies to the market.

"Reading the market accurately and knowing how to invest effectively is a matter for individual investors," the minister said, citing high subscriber numbers and success of mobile-phone based financial services.

Kenya had 31.3 million mobile subscribers in the quarter ended September last year, representing a penetration of 76.9 percent of the population.

Safaricom, whose financial services service called M-Pesa is the biggest, had 11.55 million active users, sending more than 90 billion shillings ($1.04 billion) per month, in the same period.

($1 = 86.3000 Kenyan Shillings)

(Reporting by Duncan Miriri; Editing by Sophie Walker)