Airtel Kenya scrambling to find local investors
- Published on 16 October 2012
Indian mobile services company, Bharti Airtel, is scrambling to find local investors in Kenya to purchase a 15% stake in its operations in the East African nation so as to be in line with the country’s foreign ownership regulations.
The Business Daily has reported that the telco, which was offered a three year grace period to comply with the ownership law, has up until next April to find Kenyan investors to buy the remaining 15% stake.
The newspaper also reported that the company is facing challenges in finding a local investor for the stake valued at $61million, and is seeking some leniency on the matter, owing to difficulties.
Currently, only 5% of Airtel Kenya is owned by a local shareholder, Naushad Merali, and according to regulations by Communications Commission of Kenya (CCK) - telecom companies must maintain that at least 20% of the firm is owned by local shareholders.
95% of Airtel Kenya is currently owned by foreign shareholders.
“Airtel will be required to comply with the ownership policy at the expiry of the waiver period,” said Francis Wangusi, director general, Communications Commission of Kenya (CCK).
Some Kenyan analysts have weighed in on the regulatory requirements set up by the CCK saying that these rules may discourage future investors.
“Such a requirement may be good or bad at the same time,” said Danson Njue, senior analyst, Informa, Telecoms & Media in East Africa.
“Good in the sense that it provides some guarantee for local ownership in foreign firms setting up business in the country. Also, it provides the necessary regulation to ensure that locals also benefit from such businesses.
“On the contrary, it may discourage some investors from investing in the country as it is sometimes very difficult for foreign investors to find local investors who share the same ideologies,” he explained.
The mobile network, which entered the East African country back in 2010, is the second largest telecoms operator in that country.
But it has yet to turn a profit.
“Airtel Kenya has not been making any profits since entering the local market and this may make it a little bit hard to secure a local investor for the 15% stake. However, it may consider negotiating for an extension of the deadline to give it more time to source for an investor,” Njue concluded.