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The Nairobian

Communications Authority (CA) board insists Yu Mobile deal 'clean'

Business

By Patrick Alushula | Apr 21, 2016

*CA Board Chairman Ben Gituku (R).* *The Communications Authority (CA) has dispelled claims that the sale of Essar Telecom Kenya Ltd was riddled with corruption.* (PHOTO: COURTESY)

The Communications Authority (CA) has dispelled claims that the sale of Essar Telecom Kenya Ltd was riddled with corruption.

According to the authority, the deal which saw Essar’s voice business and licence bought by Airtel, while Safaricom took up the data unit and infrastructure sparked fireworks when the board differed with management on whether or not Airtel Kenya was supposed to pay a Sh2.3 billion frequency licence fee.

Airtel’s acquisition of yuMobile subscribers also meant accessing a 15-year operating licence that is set to expire in 2023. But the CA board was of the opinion that Essar had to pay its expiring licence fee and that the deal with yuMobile did not automatically transfer the licence.

According to CA Chairman Ben Gituku, the emerging difference with the management came up at the tail end of the deal when the matter was raised at a board meeting.
“Some board members sought to overturn the decision of board meeting of March 27, 2014, claiming Airtel had to pay for the renewal of its licence amounting to $27 million (Sh2.3 billion),” said Mr Gituku.

He added that despite the management warning the board against the stand, the board stood its ground and resolved on May 26 that Airtel should be charged the fee on grounds that “there were reconciliations to be made based on payments already made by the firm,”

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However, when the management notified Airtel, it indicated that it would move to court. That is when bribery allegations came up.

“Just about the same time, CA received a letter addressed to the director general complaining that one of the CA board directors had solicited bribes from the (Airtel) mobile network operator in exchange for facilitating a review of licence fees payable to the authority,” added Gituku.

He did not disclose the source of letter or the former member of the board being implicated, but said that the letter is in the authority’s records and is currently being investigated.

The matter that Airtel filed in court is still pending.

“We deeply regret that the ex-board member is now blaming corruption at CA in respect to Airtel’s licence fee for his woes with the authorities,” he explained.

Last year, CA Director General Francis Wangusi wrote to the board advising them to reconsider their stand on the Airtel licence renewal.

He argued that the agency stood a high chance of losing the case since the authority did not include the settling of the initial frequency spectrum licence fees as a pre-condition for acquiring Essar Telecom’s properties.

In November, Mr Wangusi said that Airtel would not be asked to pay the fee since it had already been approved by the Government. The only pre-set condition that touched on licensing was that Airtel and Safaricom paid $5.4million each to bring into line the acquired Essar license rights of eight years.