Kenya must hold new SNO auction

19 Mar 2007

The Communications Commission of Kenya (CCK) has revealed that it will be forced to re-run the auction for the country’s second national operator (SNO) licence which was originally held last year. That auction was won by the Dubai-based Vtel consortium with a bid of KES12 billion (USD169 million), but problems with financing at local shareholders left Vtel unable to pay the licence fee by the deadline in January this year. The CCK then offered the concession to the second-placed bidder, a consortium which was led by the Reliance group of India, on the condition that it matched Vtel’s offer. It has now emerged that Reliance has decided not to apply for the concession, meaning the regulator must launch a new auction.

The SNO concession offers a national fixed line licence which will allow entrants to compete with current monopolist Telkom Kenya. The SNO licensee will also be able to launch a nationwide cellular service alongside Safaricom and Celtel. It has been suggested that prior to the new auction the government may take the opportunity to abolish the requirement for 30% local ownership.