Vtel loses out in Kenya

29 Jan 2007

The Communications Commission of Kenya (CCK) has cancelled the Vtel consortium’s winning bid for the country’s second national operator (SNO) following its failure to resolve a series of shareholder disputes. Vtel won the tender for the concession in October 2006 with a bid of KES12 billion (USD170 million), but has since failed to officially apply for the licence, despite being given three extensions to the deadline. The Dubai-based group has been attempting to find new local investors after its original partners were unable to secure their share of the funding, according to a report from The East African Standard.

The CCK will now offer the combined fixed line and cellular licence to the second-placed bidder, the Reliance Consortium, whose backers include Reliance Telecom of India. Reliance offered KES7.7 billion (USD111 million) in last year’s auction, but will have to increase its offer to match that of Vtel if it wants to secure the concession. The only other bid came from MTNL, also of India, which offered KES3.6 billion (USD52.1 million). If Reliance opts to forego the opportunity to step into Vtel’s shoes then the government says it will relaunch the tender, and may relax some of the conditions, including the stipulation that requires 30% local ownership.

Kenya, Communications Authority of Kenya (CA)