yuMobile sale hangs in the balance after Safaricom’s exit

Corporate News 

Safaricom CEO Bob Collymore says his firm is no longer interested in this deal. Photo/FILE 

By OKUTTAH MARK, mokuttah@ke.nationmedia.com

In Summary

• CEO Bob Collymore insists Safaricom had left the transaction table before the regulator set the tough conditions.
• Mr Collymore said his firm was not looking at the conditions that the Communications Authority of Kenya (CAK) had set to accept or reject them but was instead studying them for any possible avenue of going back to the transaction.
• Safaricom is specifically unhappy with the demand that it opens up its M-Pesa agency network to rivals Airtel, Telkom Kenya Orange and the newly licensed mobile virtual network operators.

 

Telecoms service provider Safaricom Thursday threw a spanner in the works in yuMobile’s buyout plans, insisting that it was already out of the race to acquire the latter’s assets by the time the market regulator set tough conditions for the deal.

Safaricom’s chief executive Bob Collymore said his company was not looking at the conditions that the Communications Authority of Kenya (CAK) had set to accept or reject them but was instead studying them for any possible avenue of going back to the transaction.

“I said last week and still maintain that Safaricom is no longer interested in this deal. The decision we must make is whether to come back to it or not,” Mr Collymore said, adding that his company would make public its decision in three weeks.

Safaricom is specifically unhappy with the demand that it opens up its M-Pesa agency network to rivals Airtel, Telkom Kenya Orange and the newly licensed mobile virtual network operators.

People familiar with Safaricom’s thinking on the CAK’s conditions said the telecoms operator is preparing to vigorously defend M-Pesa. 

Mr Collymore’s pronouncement came on the back of Safaricom and Airtel’s Monday meeting with yuMobile at which they discussed the conditions the CAK had set for the planned sale.

READ: Tough options for Safaricom’s Collymore

yuMobile’s chief executive Madhur Taneja said parties to the transaction had identified a number of contentious issues in the CAK’s 14 conditions and sought clarification that would enable them make a decision.

Mr Taneja said Airtel had particularly sought a clarification on when it should pay the $5.4 million (Sh469 million) fee that the CAK had set for the planned takeover of yuMobile assets.

Airtel wants to know whether it is required to pay the amount now or wait to do so in January 2015 when its licence comes up for renewal.

Safaricom is understood to have sought a clarification on the directive that it open up its mobile money agency network to rivals when the matter is pending before court.

READ: Safaricom’s plan to buy yuMobile assets hits a snag

Kenya’s leading operator is also questioning whether the CAK had properly exercised its mandate on the matter, which is understood to directly fall under the purview of the Treasury.

Airtel is also seeking a clarity on which licence it should cede to the regulator. This is because Airtel has expressed interest in buying yuMobile’s business, including its licence, raising the possibility of the operator owning two mobile licences.

Airtel is currently operating on the licence it acquired from Zain in 2010 while yuMobile has been operating on the one that originally belonged to Econet Wireless Network.