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Airtel eyes waiver on the 30pc local ownership rule

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Airtel eyes waiver on the 30pc local ownership rule


Airtel

Customers outside an Airtel shop in Mombasa. FILE PHOTO | NMG

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Summary

  • Airtel Africa is considering seeking an extension or exemption from rules requiring it to cede a 30 percent stake in local subsidiaries to Kenyan investors by March 2024.
  • Sidestepping the ownership rules could, however, force the multinational to pay $20 million (Sh2.1 billion) for its expired licence.

Airtel Africa is considering seeking an extension or exemption from rules requiring it to cede a 30 percent stake in local subsidiaries to Kenyan investors by March 2024.

Sidestepping the ownership rules could, however, force the multinational to pay $20 million (Sh2.1 billion) for its expired licence after the government demanded settlement of the dues as a precondition to issue the exemption.

“Under the amended ICT policy, a licensee may apply to the Ministry for ICT for an extension to comply with the requirement, or obtain an exemption,” Airtel says in annual report.

The multinational says the new ownership rules published on April 9 have an impact on two of its local subsidiaries –Airtel Networks Kenya Limited (offering telecoms services) and Airtel Money Kenya Limited (mobile commerce services).

Before the publication of the new guidelines, Airtel Networks was holding an indefinite exemption from the ICT ministry that was issued on March 20, 2013. The subsidiary is now required to sell a 30 percent stake to local shareholders in three years from April 9.

Airtel Money on the other hand has to cede a 30 percent equity to Kenyan investors in three years from November 2020 –the date it was issued its latest licence as a content service provider by the Communications Authority of Kenya (CA).

Buying a 30 percent stake in the subsidiaries will likely require billions of shillings.

The multinational does not disclose the units’ financial performance but they are part of a group of companies in its East Africa cluster that reported improved profitability in the year ended March.

Airtel says this region, comprising Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia, posted an operating profit of $408 million (Sh44 billion) in the review period.

This was up 53.4 percent from $266 million (Sh28.7 billion) recorded a year earlier. Seeking exemption from the new ownership rules in Kenya will intensify the company’s clash with the government over unpaid licence fees.

Joe Mucheru, the ICT Cabinet Secretary, has said that Airtel must first renew its licence that expired in February 2015 before entering talks with the government for a waiver of the local ownership rule.

Airtel Networks Kenya is locked in a court stalemate with the CA over the renewal of its operating licence, with the regulator insisting that the firm must pay the permit fee of Sh2.1 billion to stay in business.

In the meantime, Airtel is operating on a licence acquired along with Essar’s (yuMobile) assets in a deal concluded in 2014.

“If they are operating without a licence, how do we even grant them an exemption? We are still in court with them. I cannot give permission if they have not paid the licence fee,” Mr Mucheru told the Business Daily in an earlier interview.

“They (Airtel) have to go to the regulator to get a licence. The regulator will have to show that they have met all rules except that they are not able to find local investors if that is the case. Then the Communications Authority of Kenya can write to me for exemption.”



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88E70B70D1Aa46A497A524Eca9E5C16A?S=96&D=Mm&R=G Airtel Eyes Waiver On The 30Pc Local Ownership Rule
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