Madagascar tycoon to buy Zuku parent firm Wananchi Group

Zuku was the dominant player in the fixed wireless internet market a decade ago with a 49 per cent market share. [File, Standard]

Wananchi Group, which owns the Zuku brand, is planning to sell the company to Axian Telecom Fibre of Mauritius.

According to filings that the two companies have made at the Comesa Competition Commission, Axian will acquire 99.63 per cent of Wananchi. Axian Telecom Fibre, the filings show, is a newly incorporated subsidiary of Axian Telecom Ltd.

Axian, owned by Hassanein Hiridjee of Madagascar, has operations in several Comesa markets. Among the firms owned by Axian include Tanzania's telecommunication firms Tigo and Zantel.

The regional competition watchdog noted that it had received a notification "regarding the proposed acquisition by Axian Telecom Fibre Limited (acquiring firm) and Wananchi Group (Holdings) Limited (target firm)".

"The notified transaction involves the acquisition of 99.63 per cent of the issued ordinary shares of the Target Firm by the Acquiring Firm," said the Comesa Commission, adding that Wananchi would sell of its stake in iSat Africa Limited, a satellite communications company.

"As a condition precedent to the completion of this transaction, the target firm will divest of its indirect majority shareholding in iSat Africa Ltd FZC, a holding company incorporated in the United Arab Emirates with subsidiaries in Kenya and Zambia (the iSAT Group).

"As such, the iSAT Group does not form part of the target group for the purposes of this transaction."

Other than Tanzania, Axian has operations in Uganda, DR Congo, Mauritius, Madagascar and Comoros. It has an administrative office in Kenya that carries out business support functions for the acquiring group but does not generate any turnover in Kenya.

Should Axian get the necessary approvals, it will be taking over what was once a vibrant internet pioneer firm in Kenya but has in recent years appeared to lose its shine following years of shareholder fights and customer complaints.

Launched in 1998, Zuku's parent company Wananchi pioneered the internet service provision business in Kenya and commanded a lead in the market for more than a decade.
It has, however, appeared to lose grip in recent years, partly due to shareholder wrangles, which have dampened new investment and product development.

Wananchi Online was founded by the late techpreneur Njeri Rionge together with former ICT Cabinet Secretary Joe Mucheru and became Wananchi Group in 2008 when new shareholders came on board following several rounds of fundraising.

The firm would, however, over the next decade be involved in many controversies including the 2018 case where some of the local shareholders claimed to have been defrauded some Sh20 billion by rival shareholders.

Wananchi was also in 2018 accused of not paying the Kenya Revenue Authority (KRA) taxes to the tune of Sh3.4 billion, a case in which KRA would get the backing of some of the shareholders who had earlier claimed they were defrauded by the firm.

The firm has also suffered a dented reputation due to frequent complaints by subscribers over internet outages, who have filed complaints with the Communications Authority of Kenya.

The mix of these and fierce competition have seen the firm cede significant ground in the market.

According to data from the CA, Zuku was the dominant player in the fixed wireless internet market a decade ago with a 49 per cent market share. It has lost ground and had a market share of 18.8 per cent as of March this year.

With a subscriber base of 262,753, the firm ranks third after Safaricom and Jamii Telecom.

Safaricom, which has risen to be the biggest player in the fixed data market segment, has 522,217 subscribers, which translates to a market share of 37.4 per cent, up from just 6.9 per cent in 2014.

In 2022, Triple HoldCo Ltd, Liberty Global Europe 2 Ltd and Altice Africa SARL converted loans advanced to Wananchi, taking over a 75 per cent stake in the firm, significantly diluting the original shareholders.