The proposed joint bid by Safaricom and Airtel for the Kenyan operator Yu has hit a roadblock in the form of regulatory uncertainty.
The two operators are aiming to acquire Yu, which is exiting the market, with Airtel wishing to take over its subscribers while Safaricom will receive its network assets. However, one month after the deal was tabled, the operators are still waiting for clearance from the Communications Authority of Kenya.
Jaindi Kisero, a columnist in Kenyan newspaper The Nation, stated a belief that “that the proposal by Safaricom, Airtel and Yu no longer has the support of most of the decision makers within government”.
The overarching concern is that Safaricom is already dominant in the mobile market with a share of around two thirds. The addition of Yu’s network assets would only boost its already strong position, discouraging competition.
Safaricom’s corporate affairs director Nzioka Waita said: “We are giving very serious consideration to pulling out for the simple reason that the lack of regulatory certainty puts us in a place where the key fundamentals of the transaction have changed.”
The deal, which is believed to be worth at least $100 million, would eliminate an operator from the Kenyan market, lowering the total number to three. The regulator has thus far provided no comment to either the buyers or the current owner, Essar. The firms have signed an MoU but no binding agreement.
Both buyers have pointed out that the offer is not indefinite, which could prove problematic as the term of the regulator’s board concludes on April 2. The government has initiated proceedings for appointing a replacement.