Orange must clear all debts, regulator warns

Telkom Kenya has operated for two financial years without paying for requisite licences and frequencies, the Communications Authority of Kenya (CA) has said.

CA Director General Francis Wangusi told Business Beat that Telkom Kenya, the country’s third largest mobile operator has not settled their dues, a clear indication that the firm has been struggling to stay afloat.

The revelations come at a time when France’s Orange, which holds 70 per cent stake in Telkom Kenya has announced that it is exiting the Kenyan market, selling its stake to equity firm Helios Investment Partners.

Now, Wangusi says the operator must pay all the debts owed to the regulator estimated to be Sh1.5 billion before the deal can be approved, among a raft of other conditions. “We have not received official communication that they are exiting but when they do, they must meet some conditions before we approve the deal,” Wangusi said.

He said top of the conditions is to clear all debts to CA and pay for all penalties for failing to meet quality of service parameters. “But most important is the debt for licences and frequencies which must be paid upfront before negotiations can start,” he said.

Airtel Kenya also faces similar fate, with CA saying that the second biggest telecom operator owes it about $27 million licence fees for radio frequencies and spectrum as well as operation. However, Mr Wangusi noted that the issue was a bit complicated. “It’s a question of misunderstanding during the transfer of yuMobile shares to Airtel and Safaricom,” he stated.

Airtel CEO Adil El Youssefi in a letter dated July 29, 2015 and which was addressed to Mr Wangusi said that they were opposed to the manner in which the $27 million fees were reached. He argues the proposed fees were arrived at without consultation with the concerned stakeholders. He wants the CA fee to be based on the performance of the operator and not a fixed amount across board.

“As a small operator we are not in a position to afford such kind of high fees, and we are therefore seeking for such determination in order to incorporate our concerns,” said El Youssefi in the letter. Mr Wangusi revealed that the board will meet next week to resolve the Airtel matter. “As of now, Airtel don’t have a licence and are using yuMobile’s,” said Wangusi.

Airtel acquired yuMobile subscribers last year and its operating licences, the 15-year licence expires in 2023. This means that although Airtel’s licence has expired, it still owns another one. Airtel had until this February to pay Sh2.3 billion for a 10 year-licence following the expiry of its initial permit that was issued in 2000. Airtel had paid a $55 million fee for its first 15-year licence. Safaricom last year paid an equal amount to have its licence renewed.