Safaricom shareholders approve Sh7bn yuMobile buyout

Safaricom CEO Bob Collymore speaks to journalists during the firm's AGM at the Kasarani Safaricom Stadium, Nairobi, Sep 16, 2014. PHOTO | SALATON NJAU 

In Summary

• Shareholders approved the buyout at Safaricom’s AGM on Tuesday after they were assured that the transaction will not affect their dividend payout and that the acquisition was necessary as it will offer the firm a wider frequency spectrum.

By OKUTTAH MARK
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Safaricom shareholders have approved the telecommunication company’s joint bid for rival yuMobile, on condition that the Sh7 billion buyout will not affect their dividend pay.

Shareholders approved the buyout at Safaricom’s annual general meeting Tuesday after they were assured that the transaction will not affect their dividend payout and that the acquisition was necessary as it will offer the firm a wider frequency spectrum.

“We are seeking your approval for the purchase of 100 per cent of East Africa Tower Company that is owned by Essar. Tthe acquisition will provide us with much needed frequency spectrum that will enable us accommodate more customers and roll out new services,” said Safaricom chairman Nicholas Ng’ang’a.

Safaricom intends to acquire yuMobile’s assets that include its frequency spectrum, the building that houses Essar and IT equipment, in a joint buyout deal that will see Airtel acquire 2.5 million yuMobile subscribers. 

Mr Ng’ang’a said the firm will finance the buyout from its cash reserves and that it will not have any effect on the Sh18.8 billion set aside for paying shareholders a dividend of 47 cents per share in October.

READ: Essar to sell Yu to Airtel, Safaricom for $120 mn

The yuMobile buyout will still need to get approval from two regulators, the Communications Authority of Kenya, and the Competition Authority of Kenya.

Bob Collymore, Safaricom’s CEO, said the firm is ready for the competition envisaged with the licensing of the Mobile Virtual Network Operators (MVNOs) that has been awarded to three firms including, Equity’s subsidiary—Finserve, Tangaza money and ZionCell.

“As I have said before, Safaricom is not afraid of competition. In the past some operators have thought that they have silver bullet solutions to solve the challenges in the industry and they tried the number portability, and the reduction of the mobile termination rates (MTR). We warned the industry but no one listened to our advice. All these have not worked.” Mr Collymore said.

Mr Collymore added that the firm is looking forward to boost its revenue through the second generation M-Pesa platform that is being tested at its headquarters.

“With the new platform that is now located here in Kenya and is currently undergoing tests, we expect to increase the number of M-Pesa transactions to 600 per second from the current 320 per second,” Mr Collymore said.

This he said will solve the problem of delays. Currently, M-Pesa transactions are routed to Germany and bounced back to Kenya. This has been blamed for system delays and service outages when connection is disrupted due to under-sea fibre optic cable cuts.