Corporate News
From left: Safaricom CEO Bob Collymore, outgoing Airtel Kenya managing
director Shivan Bhargava and yuMobile country manager Madhur Taneja
during a past Press briefing in Nairobi. Photo/FILE
By Jaindi Kisero
In Summary
- Friday verdict by the CAK board came against the backdrop of heavy undercurrents. Out of the blue, a Nigerian entity by the name Mega-tech Engineering Limited, popped out, seeking the support of the regulator to purchase yuMobile.
- Available correspondence show that the Nigerians offered to purchase yuMobile for an enterprise value of $200 million (Sh17.4 billion).
- yuMobile itself has also questioned the credentials of the Nigerians. But even with the Nigerians out of the scene, chances are the forces arraigned against a deal between Safaricom and yuMobile will resurrect in other forms.
On paper, the Communications Authority of Kenya (CAK) merely set out to lay down conditions which mobile company Safaricom has to meet in the quest to acquire troubled yuMobile’s assets.
But in reality, what the CAK board did last Friday
amounted to a re-writing of the rules of competition governing the
mobile telecommunication companies.
In total, the number of conditions given to
Safaricom and Airtel were 14. The scope of the conditions was so wide as
to form a completely new regulatory regime.
The most controversial of them all was the demand
that Safaricom must share its money transfer and Sim Card registration
centres with its rivals.
Mobile money is regulated by the Central Bank of Kenya — not the CAK.
Secondly, considering that Airtel and Safaricom
presently have a dispute before the High Court touching on the very same
issue, it was surprising that the CAK board gave direction on a matter
that is before the court for adjudication.
Safaricom has not declared whether it will accept the conditions or forget about acquiring yuMobile’s assets altogether.
Whether it will be prepared to trade yuMobile
assets for the stringent regulatory conditions that the CAK has set
remains to be seen.
If the company opts out — as now looks likely — it
would be interesting to see whether a new serious suitor will emerge
for those assets.
The fact is that yuMobile has been looking for serious suitors for a long time.
The Friday verdict by the CAK board came against
the backdrop of heavy undercurrents. Out of the blue, a Nigerian entity
by the name Mega-tech Engineering Limited, popped out, seeking the
support of the regulator to purchase yuMobile.
Said to have friends in high places and big
political connections in Kenya, representatives of the Nigerians last
week flew into Nairobi in a private jet and started pulling strings —
lobbying to be allowed to purchase the company.
Although authorities deny knowledge of having encountered the controversial Nigerians, the Business Daily
has seen a letter, dated March 24, 2014, written by the chairman and
chief executive of the group, Dr Aliyu Abubakar, confirming interest in
purchasing yuMobile even as he sought to the co-operation of the
regulator in its plans.
The Business Daily has also confirmed
from yuMobile that the Nigerians indeed contacted the vice-president of
Essar Services India in charge of mergers and acquisitions, Mr Jayan
Dsouza, with an offer to purchase the company’s Kenya subsidiary.
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