Safaricom, the leading Kenyan cellco by subscribers, has announced its intention to acquire two local data operators: IGO Wireless and Instaconnect. The move is designed to make internet and data services more affordable and more accessible to its customer base. IGO Wireless operates a fixed wireless data service and holds a WiMAX licence, whilst Instaconnect integrates data solutions for clients. Both companies operate under the same management team.
However, the Communications Commission of Kenya (CCK) could still derail Safaricom’s plans. In regulations published at the end of May 2010, the CCK can veto any buyout deal exceeding 15%. The regulation was envisioned as an attempt to curtail the acquisition of small and medium-sized firms with crucial frequencies or infrastructure. Safaricom’s mooted acquisitions will inevitably attract the regulator’s scrutiny.
Eight companies in Kenya already hold WiMAX frequencies, and if the acquisition goes through as planned, Safaricom will own three of them. Safaricom’s first acquisition was a 51% stake in WiMAX provider One Communications in August 2008. This was followed a year later, in August 2009, with a 100% acquisition of wireless internet provider Packet Stream Data Networks. Safaricom CEO Michael Joseph commented: ‘We have always been on the lookout to acquire additional WiMAX to enable us maximise our data business. The new acquisition will help us run at a good capacity, helping us change how Kenyans access their internet.’