Safaricom eyeing shareholders’ nod for Sh7b yuMobile deal

NAIROBI, KENYA: Safaricom is formally seeking the approval of its shareholders to acquire various assets of Essar Telecom, the operators of yu mobile network, for Sh6.9 billion ($69.25 million).

As a first towards the realisation of this dream, Safaricom wants to fully acquire East Africa Tower Company Ltd from Essar for Sh88 million ($1 million). East Africa Tower Company manages all the sites and base stations of Essar Telecom. Safaricom has also amended the notice of its annual general meeting slated for September 16 and will be seeking, as a special business, the approval of the shareholders to acquire 100 per cent shareholding in East Africa Tower Company Ltd. If this approval is granted, and subject to the approval of the Communications Authority of Kenya (CA), East Africa Tower Company Ltd will become a wholly owned subsidiary of Safaricom Ltd.

Safaricom’s external and corporate affairs director Nzioka said the approval of shareholders is necessary before that of the CA is sought. “Shareholders have to approve the transaction before we put the information before the CA for their approval,” Nzioka told Weekend Business on phone.

STRINGENT CONDITIONS

A notice published in yesterday’s newspapers said the acquisition of East Africa Tower Company is part of the large transaction through which Safaricom is purchasing various assets of Essar including but not limited to the right to use certain frequency spectrum currently used by Essar, certain passive infrastructure on the base transmission station towers, various leases and various IT equipment.

“Completion of the transaction is subject to the completion of various transaction agreements as well as the receipt of the required regulatory approvals,” the notice said. “One of the conditional agreements is a share purchase agreement for the purchase by Safaricom of all the issued share capital of East Africa Tower.”

The latest developments clear the air on whether Safaricom is willing to proceed with the deal or not. The mobile operator has been sending mixed signals after the sector regulator set out stringent conditions for the deal that also includes Airtel that is interested in the 2.8 million yu customers.

The Communication Authority has insisted on infrastructure sharing and collocation as the main condition before it approves the deal. This will mean that Safaricom opens up its iconic Mpesa mobile money transfer platform to rival Airtel and Orange. Safaricom has strongly opposed this condition on the basis that it has invested massively on its infrastructure and feels the other operators should not be given such a soft landing.

A COMPROMISE

However, the regulator is said to have relaxed some of the conditions to allow the deal to go through. A compromise was reached after Airtel, Safaricom and Essar-owned yuMobile petitioned it to detach general regulatory issues from the proposed deal.

On Friday Nzioka said as of Thursday, Airtel were still on the race for the conclusion of the deal. “I have no reason to believe they will not go ahead with the transaction,” Nzioka said. An attempt to get a response from the Communication Authority Director General Francis Wangusi was not successful since he did not return our call or short message by the time of going to press.