Saturday, August 23, 2008

Kenya - Econet to launch ... eventually

Kenya: Econet Pledges Phone Service By December

Econet Wireless has promised to deliver Kenya's third mobile telephone network by December this year.

Mr Michael Foley, CEO for Econet Wireless Kenya, said his firm had secured an extension of an earlier September deadline to have the network running, after it lapsed.

"We have been in touch with the Communications Commission of Kenya over this issue. After consultations that included visits to our sites to evaluate work already done, they have given us upto end of November as the new date. I assure you we will meet it," said Mr Foley during his first media briefing on Wednesday evening at the Serena Hotel.

His firm was almost closing site-sharing deals with the existing operators. Site-sharing, industry-speak for using another network's installations such as towers at a fee, has been a key plank of Econet's market entry strategy.

"We have the capacity through our parent company, Essar to build our entire network. But we believe in the long run, it is beneficial for everybody to have operators sharing infrastructure. I am glad people are beginning to see the logic and our negotiations are advanced. I foresee closure in two weeks," he said.

Earlier indications were that the two incumbent providers, Safaricom and Zain were not keen on the proposal to share their infrastructure with the dominant notion being that it would give Econet undue advantage.

Since it won the nod to set up Kenya's third mobile telephone network in 2003 as the lead strategic investor, Johannesburg-based Econet Wireless International's venture in this country has been a magnet for controversy.

At one point majority shareholder, Zimbabwean businessman Strive Masiyiwa who operates out of South Africa, had alleged that his frustrations were down to his refusal to play ball with corrupt State operatives.

Most of the disputes, which found lengthy play in court, revolved around the original shareholder agreement and failure by some local owners of the firm (principally the Kenya National Federation of Cooperatives), who were supposed to collectively hold some 30 per cent of the shares, to raise enough cash to pay for the license.

Issues came to a head in November 2004 when the then Minister for Information and Communications Raphael Tuju took the unprecedented step of cancelling Econet's licence.

Econet took him to court but withdrew the case in September last year, paving the way for the deal with Indian firm Essar Communications Holdings Limited.

As part of the deal, Mr Foley said the Indian investors, who are keen to build a mobile phone business in Africa, had committed $500 million to the venture in exchange for a 49 per cent stake in Econet Wireless International.

Essar now owns 49 per cent of the 70 per cent that EWI owns in the Kenyan operation, which translates into 34.3 per cent of Econet Wireless Kenya, leaving EWI with 35.7 per cent.

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