Airtel Kenya in ownership tussle

Mobile network operator Airtel Kenya is embroiled in an ownership battle after it emerged it has less than six months to find a local buyer for a 15 percent stake in the company, in compliance with Kenya’s regulations.

The law makes it mandatory for telecom companies to have at least 20 percent of their shares held by locals investors, and Airtel’s deadline to comply with this is April 2013.

The company, which entered the Kenyan market in 2010 after acquiring Zain, was given a grace period of three years to comply with the regulation. Two and a half years later, the telco is yet to find a buyer.

“Airtel will be required to comply with the ownership policy at the expiry of the waiver period,” Francis Wangusi, the CCK director general told Business Daily.

However, Airtel is reportedly weighing the possibility of asking for an extension, saying, “Finding a buyer for the 15 percent stake worth billions of shillings would be difficult given the fact that the business is yet to make a profit since it was launched three years ago.”

The 15 percent stake is now estimated to be worth KSh5.3 billion (US$62.8 million), which was initially held by businessman Naushad Merali, who was then the only local shareholder in Zain, before it sold its African interests to India’s Bharti Airtel back in 2010, reports Business Daily.

Eric Musau, a research analyst at Standard Investment Bank, told Business Daily, that it may not be easy for Airtel to attract local investors, with the major challenge being the company’s lack of profits.

He added that the process of agreeing on a reasonable valuation of the shares in such circumstances is enormous.

Observers suggest that Airtel may have to get a buyer or seek an extension to the grace period.

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