Kenya’s leading mobile operator Safaricom is currently not taking part in a transaction to buy assets from smaller rival Yu Mobile, its CEO has said.
Bob Collymore told local newspaper The Nation that Safaricom has decided to pull out of the deal…
Kenya’s leading mobile operator Safaricom is currently not taking part in a transaction to buy assets from smaller rival Yu Mobile, its CEO has said.
Bob Collymore told local newspaper The Nation that Safaricom has decided to pull out of the deal because of conditions set out by the country’s telecoms regulator, the Communications Authority of Kenya (CAK).
The operator is however studying options to come back into the transaction and a decision is expected to be made public by the end of April.
In late March, the watchdog granted conditional approval to split Yu Mobile’s assets between its larger wireless rivals, Safaricom and Airtel.
Airtel was given the green-light to buy the minnow’s subscribers and GSM licences, while Safaricom received permission to snap up its network infrastructure on condition that it shares its passive and active infrastructure with other licensed operators and service providers.
The CAK added: “Among the conditions are that all firms involved be current in payment of the outstanding regulatory fees, that they ensure that all Yu subscribers retain their numbers and related contracts in the transition period and that Airtel submits the proposed service level agreement (SLA) for the subscribers acquired from [Yu]”.
However Safaricom, which is controlled by Vodafone, has been unhappy with the demand to open up its mobile phone-based money transfer and micro-financing service, known as M-Pesa, to rival MNOs and MVNOs, according to the newspaper. Meanwhile, Airtel is reportedly concerned about the timeline for the regulatory fee payment and whether it might need to sell one of its licences.
With mounting losses and a market share of only 9%, as opposed to 66.5% for Vodafone’s Safaricom and 18% for Airtel, Yu Mobile has been struggling to survive.
In early March it was announced that Yu, which is majority-owned by Indian conglomerate Essar, would stop operating and that its assets would be split between the two market leaders.
Yu’s difficulties are not recent. Since it entered Kenya in 2008, its operations have been affected by an ongoing price war in the market.
The country’s fourth and smallest mobile player is Telkom Kenya, which has less than 7% of the market. Its parent, French incumbent Orange, has recently launched a strategic review of the asset which could see it sell the operator or bring in a new partner.
