yuMobile sale deal still hanging

NAIROBI, KENYA: The sale of Essar Telecom’s yuMobile still hangs in the balance after the Communications Authority of Kenya (CA) insisted parties to the deal must meet the 14 conditions laid down before approving it.

The deal, where Safaricom and Airtel had bid to buy yuMobile, could also take longer than expected. It was initially expected to conclude in six months but the regulator won’t budge on its requirements while the operators seem not prepared to meet the conditions. The three players had expected the sale to have concluded by June. Safaricom and Airtel in February this year expressed interest to buy the operator and towards end of March the Authority gave a conditional approval but imposed tough conditions the parties were to meet. Some conditions have not gone well with the operators.

In particular was the requirement that Safaricom opens up its mobile money platform to competitors. Safaricom has in the recent stated that some of the conditions would have made the deal too costly for the company. Francis Wangusi director general CA said the regulator had given a conditional approval and the deal was good to go as long as the three players met the conditions.

NOT OF ESSENCE

While CA had given a six month transition period, Wangusi on Friday said the Authority consent to the sale would be determined by the compliance of the companies to the requirements adding that time was not of essence especially from the regulatory side.

“It is a business decision for them and Essar can decide to sell to them or any other buyer at any time... it is an individual decision. The Authority only comes in because of the spectrum and consumers,” he said. Airtel had expressed interest in acquiring yuMobile’s customers while Safaricom was to acquire the firm’s right to spectrum and infrastructure including 453 sites located in different parts of the country.

Other than the fact that neither Safaricom nor the regulator is willing to back up on their stands, it is notable that Safaricom is highly likely to get additional spectrum through the communications and surveillance deal with the State.

Airtel also appears cozy with the recent deal to with the recently licensed mobile virtual network operators, who are expected to use its network to deploy their services, which could be a substantial revenue stream for Airtel.

Madhur Taneja Essar Telecom chief executive said the firm expected some progress in the sale process after the appointment of a chairman to CA’s board. He had in the past said the absence of a chairman at the regulator had caused some delay, noting that negotiations needed the regulator to give directions.

“There is a chairman in place and we now expect to see some progress. We hope to conclude soon,” he said, but failed to give timelines as to when he expected to deal to be concluded.