Kenyan operator sale under threat – reports - Mobile World Live

Kenyan operator sale under threat – reports

26 MAR 2014

Safaricom and Airtel’s joint bid for smaller rival Yu, which involves the former taking over its network assets and the latter grabbing subscribers, is in doubt because of the uncertain attitude of the regulator.

According to Bloomberg, Safaricom is still waiting to hear back from the Communications Authority of Kenya about clearance for the deal, one month after making an application.

This fits with a report in The Nation, where columnist Jaindi Kisero spoke about a change in the attitude of the country’s politicians towards the deal.

“I now gather that the proposal by Safaricom, Airtel and Yu no longer has the support of most of the decision makers within government”.

The sticking point is Safaricom’s dominance of the mobile market – it has a share of about two-thirds – and how acquiring Yu’s network would entrench that position.

“We are giving very serious consideration to pulling out for the simple reason that the lack of regulatory certainty puts us in a place where the key fundamentals of the transaction have changed,” said Safaricom’s corporate affairs director Nzioka Waita.

The regulator has not commented.

The deal would reduce the number of operators in Kenya from four to three.

The offer is thought to be $100 million although one report said put a higher figure on it.

Essar, owner of Yu, has also had no response from the regulator. Essar, Airtel and Safaricom have signed an MoU but not inked a legally binding agreement on the deal.

The partners have emphasised that the deal is time-sensitive. However, the regulator’s board sees an end to its term of office on 2 April and the process of appointing a replacement has only just been started by the government.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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