Econet warned over rollout; fears for Safaricom IPO

31 Jan 2008

The Kenyan government has given the country’s third cellular license holder, Econet Wireless, a six-month deadline to launch commercial services or risk losing its concession. East African Business Week reports that the Communications Commission of Kenya (CCK) has imposed the June 2008 limit on Econet which was awarded its licence more than four years ago but has since been beset by financial troubles and shareholder feuds. Econet paid its USD27 million licence fee in September last year but has still to announce a launch schedule. Earlier this month Indian conglomerate Essar Group bought a 49% stake in the cellco’s parent Econet Wireless International. The Kenyan mobile market is currently home to two players: Safaricom and Celtel. Econet has reported that it is having difficulties setting up national roaming agreements with the two established operators which would allow it to piggyback on their networks until it completes its own rollout.

Separately, the government has voiced fears that the current violence and unrest in Kenya could result in lower returns from the planned public offering of Safaricom shares. The state owns 60% of Safaricom and plans to sell a 25% stake within the next few months. The sale, which was postponed in December following the outbreak of violence after the disputed general election, will go ahead soon, the government says, but it fears that potential investors may now be wary of buying into what is one of Africa’s most profitable firms.