Smell something fishy.... <snip> The history of the opening up of the telecommunications sector is littered with cases of manipulation of privatisation to allow insiders and connected operatives to acquire shares they have not paid for. To date, the true owners of an entity by the name Mobitelea Ventures Ltd that indirectly owns a 10 per cent stake in the country’s first ever GSM mobile phone operator, Safaricom Ltd, remains unknown. The investor was procured under the old and opaque privatisation regime. In the case of Teams, the government last year procured 12 investors who will be allotted shares when the cable goes into operation. Although most of the companies allotted shares are well-known telecommunication companies, a number are nevertheless names that don’t resonate. The lion’s share of the company has been allocated to Safaricom Ltd — a 20 per cent stake. In the second category are Econet Wireless Kenya Ltd (10 per cent), France Telecom (10 per cent), Kenya Data Networks (10 per cent), Wananchi Telecom Ltd (10 per cent), Telkom Kenya (10 per cent), Jamii Telecom (3.75 per cent) and Gilat Satcom (1.25 per cent). The last category are names that are not too well-known, including an entity by the name Equip Ltd (1.25 per cent), Internet Research (1.25 per cent) and Inhand Ltd (1.25 per cent). The government will retain a 20 per cent stake in the company. Under the present arrangement, the chosen investors must pay 5 per cent of the project’s funding requirement of $110 million, which will be put in an escrow account at Standard Chartered Bank of Kenya Ltd. The balance of what they are expected to pay is to be remitted when the parties consummate both a share-subscription agreement and a shareholders’ agreement in April. Contrary to the general impression, Etisalat of the UAE has no direct shareholding in Teams. What it has signed with the government is a construction and maintenance agreement and a supply contract. Whichever way one looks at it, these investors must be laughing all the way to the bank, having clinched a very sweet deal indeed. Major telecommunications operators and consumers of bandwidth whose names do not appear on the investors’ list may find it difficult to compete. The investors will be acquiring shares of the asset at the nominal value of $110 million, but its market price is bound to hit the roof once the company starts commercial operations. In a sense, the Teams model runs contrary to the conventional model of funding what is known as “consortium cables” — where entities come together to fund a proportion of development cost and share the construction risk, and are allocated capacity depending on their commitment at all these stages. In this case, it is the Kenya government that has paid for the feasibility studies as well as the cost of the marine survey and engaging Standard Chartered Bank as the financial arrangers to the project. The government is the one carrying the construction risk of the project, meaning that if construction is delayed right now, it is the one that will bear the extra cost burden. With a new privatisation regime having taken effect in January, and the process of transferring the shares to private entities still outstanding, the Treasury must now make a decision on the route to take. According to the Act, all privatisation transactions must be handled according to the new law. “Upon coming into operation of the Act, the commission shall take over the implementation and management of any ongoing process leading to a privatisation,” says section 52 of the Privatisation Act. However, the same law also says that a privatisation process that is ongoing should not be reversed to the detriment of any party..... <http://www.nationmedia.com/eastafrican/current/News/news170320081.htm> ____________________________________________________________________________________ Looking for last minute shopping deals? Find them fast with Yahoo! Search. http://tools.search.yahoo.com/newsearch/category.php?category=shopping