Communications Authority of Kenya alters terms tied to yuMobile takeover by rivals

A selection of SIM cards belonging to various networks. PHOTO | EMMA NZIOKA | FILE  NATION MEDIA GROUP

In Summary

• yuMobile chief executive Madhur Taneja said the decision means the parties can now go ahead and conclude the transaction.
• The deal, which was struck in February, has been delayed by what involved parties had termed as unrealistic conditions set by regulator.

By CHARLES WOKABI
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Communications sector regulator has revised the conditions it had set for approval of a plan by Airtel and Safaricom to acquire yuMobile.

 

Communications Authority of Kenya director general Francis Wangusi said it had withdrawn at least four of the 13 terms given to the parties before approval of the deal.

Though he did not reveal exactly which of the conditions had been set aside, Mr Wangusi said they all had to do with infrastructure sharing, an issue that has been a bone of contention in the sector.

He said the compromise was reached after Airtel, Safaricom and Essar-owned yuMobile petitioned it to detach general regulatory issues from the proposed transaction valued at about Sh8 billion.

“We met with teams from all the three parties involved in the transaction and discussed the conditions. We reached an agreement to strike out some of those conditions and handle as independent industry issues,” Mr Wangusi said.

yuMobile chief executive Madhur Taneja said the decision means the parties can now go ahead and conclude the transaction.

“We are happy the regulator listened to us and acted. We are not complaining anymore. The parties are now engaging and we will have concluded the deal within a few weeks,” Mr Madhur told the Nation.

UNREALISTIC CONDITIONS

In the proposed deal, Safaricom is to take over yuMobile’s spectrum and infrastructure and retain its employees. Airtel, on the other hand, is to acquire the operator’s 2.7 million subscribers by taking over the mobile number prefix thus allowing them to migrate to its network without having to change their identities.

The deal, which was struck in February, has been delayed by what involved parties had termed as unrealistic conditions set by regulator.

Under the original conditions, both Airtel and Safaricom were required to open up their infrastructure, mobile money agency networks and SIM registration centres to all existing and new telcom firms if they wanted to seal the transaction.

“A majority of the conditions are meant to create the kind of competitive landscape that is going to be good to the Kenyan population and consumers in this country,” Mr Wangusi said when he gave the conditional approval in March.

The three parties questioned the regulator’s decision to tie the deal to the new measures saying the rules could be introduced independently.

Facing lean times in the Kenyan market, India’s Essar Telecom, which owns the yuMobile brand, has over the past few years sought buyers for its business.

The deal comes at a time when the Kenyan telecoms sector is undergoing critical developments. In April, the regulator gave three Mobile Virtual Network Operator licences to three companies.

The permits give the trio authority to launch services similar to those offered by the telecom operators without having to own their own network.

Though none of them has started operations, their entry into the market is expected to set off a new wave of competition that will significantly change the sector’s landscape