Watchdog approves Essar carve-up; Viettel waiting in the wings following Orange revelation

31 Mar 2014

The Kenyan authorities have granted conditional approval to Safaricom and Airtel Kenya’s joint offer to buy Essar Telecom Kenya (yu), two days after Safaricom threatened to pull out of the deal over a lack of acknowledgment by the Communications Commission of Kenya (CCK). Francis Wangusi, director-general of the CCK, told reporters in Nairobi: ‘The matter has received due attention from the authority. The parties have been notified of the decision of the authority. We have not given them difficult conditions that should make them say no.’

According to Wangusi, the acquisition can proceed following the payment by Safaricom and Airtel of licence fees totalling USD5.4 million apiece; Essar Telecom Kenya is also required to pay all outstanding regulatory fees. In addition, Safaricom and Airtel must submit a plan relating to the implementation of a national roaming service and supply a written commitment on how mobile users will benefit from the service. Further, market leader Safaricom must agree to share both its ‘passive and active infrastructure’ with its competitors, Wangusi said.

Although the fate of Essar Telecom Kenya seems to have been sealed, Telkom Kenya’s future plans remain less certain. Yesterday, Standard Media reported that Vietnam’s military-backed Viettel Group dispatched representatives to Kenya in October 2013 to carry out due diligence on the ailing full-service telco. A source who requested anonymity told the online journal: ‘They were here in October to carry out an audit of Telkom assets. I’m yet to find out the outcome.’ Earlier this month, the French parent company Orange confirmed that it had hired asset management firm Lazard to find buyers for Telkom Kenya and Orange Uganda, suggesting a deal could be on the cards. TeleGeography notes that African expansion remains one of Viettel’s key aims. The company is currently active in Mozambique and holds additional licences in Cameroon, Burundi and Burkina Faso, with a licence application also pending in Tanzania.

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