Kenya MPs move to court to block Safaricom IPO Published on September 25, 2007, 12:00 am By Evelyn Kwamboka The battle to stop the sale of shares in Safaricom Limited to the public has moved to court. Three members of Parliament filed a notice at the High Court in Nairobi saying they want to stop a planned initial public offer until the Privatisation Act 2005 comes into force. Their move will also block other planned privatisations as well as secondary offers of partially privatised firms. The IPO, expected before Christmas, will see the sale of a 25 per cent stake held by the Government through the Nairobi Stock Exchange. President Kibaki has already assented to the Act, but its coming into force was on hold until recently when Parliament forced the Finance minister, Mr Amos Kimunya, to move on it. The MPs — Prof Peter Anyang' Nyong'o (Kisumu Rural), Mr Omingo Magara (South Mugirango) and Mr Mwandawiro Mghanga (Wundanyi) — claim the intended sale is illegal and undermines Parliament. They want the court to direct Kimunya to set a date when the Act will come into force. They also want an order barring the Government from any further sale of public corporations and State-held shares until when the Act comes into force. In the papers filed in court through Katwa and Kemboy Advocates, Nyong'o says Kimunya has no legal power to sell the 25 per cent stake in Safaricom or any shares in the company. "It also raises suspicion on the real motive and overall objective of the hurried privatisation exercise done within a legal vacuum, particularly when the overall effect appears likely to be detrimental to the common good against the greater national interest," he says. Another ground the MPs are relying on is that the minister has no authority to form a Privatisation Steering Committee to implement and co-ordinate the process or ignore the collective will of Parliament as expressed in the Privatisation Act 2005. "The decision of the minister is in breach of the order given by the Speaker of the National Assembly on August 23 to the minister to operationalise the Act within seven days from the said date," adds Nyong'o. Kimunya is alleged to have refused to appoint a date on which the said Act will come into force. The Act provides for the formation of a specialised privatisation commission to manage and implement the privatisation programme. Nyong'o says the Act regulates and limits the powers of the Government as well as the minister with respect to the privatisation process. The MP avers that records concerning Safaricom and Vodafone Kenya Ltd have been missing from the Registrar of Companies and Parliament cannot access them. As a result of the shares owned by the Government in Safaricom, the MP says the public has a right to know whom the company does business with. He claims that given the number of Safaricom subscribers and profit the company makes, the proposed privatisation is critical. The company this year announced a pre-tax profit of Sh17.2 billion off a turnover of Sh47 billion. It has close to seven million subscribers. Its actual shareholding structure has previously been cause for controversy. Source: http://www.eastandard.net/news/?id=1143975045 <http://www.eastandard.net/news/?id=1143975045> ************ ************* Uganda Celtel parent firm rebrands Monday, 24th September, 2007 E-mail article Print article By Vision Reporter MTC Group, the parent company of Celtel International, has re-branded to Zain which becomes the group's corporate master brand immediately. In Africa, the Zain Group will continue to trade under the Celtel brand. "Zain will bring together all our operations under a single, strong and unique identity. We believe it is the optimal platform upon which we can build a global brand with the ultimate goal of better serving our customers," Saad Al Barrak Zain Group's chief executive said. "It will propel the group towards becoming one of the top 10 global mobile telecommunications companies in the next four years." The Zain brand's theme is: "A Wonderful World." Brand architect Tito Alai, the group's chief commercial officer who also developed the Zain Group's successful Celtel brand in Africa, said: "The name Zain was selected from a list of over 400 after extensive research across many countries and cultures validated its broad global appeal." http://www.newvision.co.ug/D/8/220/588294 <http://www.newvision.co.ug/D/8/220/588294> ******************** Rwanda Tuesday, 25th September 2007 MTN needs competitor that matches their profile BY DAVID KEZIO MUSOKE SEVENTY per cent of Rwandatel shares are up for grabs. By the end of October, Rwanda's telecom market could be having a new player. Is this good or bad news for MTN Rwanda? What about the subscribers, what are they going to expect? There are six bidders including two telecom giants: the Vodacom Group of South Africa and Celtel, Africa's third-largest cell phone firm. The others include V-Tel Holdings of Jordan, Bit Map Ltd of Singapore and two little known companies: LapGreen Network of Uganda and Rwanda's R-Com. Rwandatel and its branded products, including Terracom and recently introduced Karame, have always played the fiddle to the already existing and powerful brand of MTN Rwandcell. The edgy relationship between both premier telecommunication companies has not really played a pivotal role in the development of the market and its infrastructure since 1998. According to the International Development Research Center (IDRC), MTN Rwanda grew a subscriber base four times the number of subscribers of Rwandatel, and the rate for telephone calls from mobile to fixed lines grew prohibitive. This discouraged most of Rwanda's users from calling mobile to fixed telephones. IDRC says they estimate 90 per cent of interconnection calls are initiated from the Rwandatel network and terminate on the MTN Rwandacell network (fixed to mobile). This means Rwandatel has to pay a tremendous amount of money to MTN Rwandacell for termination charges to use the MTN Rwandacell network, a business venture found to be unfair. MTN has since then operated in a monopolistic manner, controlling a market share of 95 per cent to a population of over 8 million Rwandans. The company boasts over 500,000 subscribers. Looking at MTN Rwanda closely, it belongs to the MTN family that set fort in South Africa. From the global footprint, the MTN group operates in 21 countries, serving a combined population of over 500 million people worldwide. But the gold is not that glittering for MTN Rwanda. According to the MTN Group Limited Integrated business report for last year, MTN Rwanda contributed only 2 per cent of subscribers to the South and East Africa (SEA) region of the MTN Group. It also supplied just 1 per cent of the total revenue the MTN Group collects from SEA, a region that includes South Africa, Botswana, Swaziland, Zambia, and Uganda. So what kind of competitor does MTN Rwanda need? What kind of market does Rwanda's population need? Skeptics say telecommunications is very crucial, if not one of the most important tools to eradicate the many socio-economic problems plaguing any third world country. The Rwandan government has made it very clear it is interested in a new owner of Rwandatel who will have to meet certain objectives underlined in the country's Vision 2020. The Grameen Foundation argues Rwanda has a relatively low rural tele- density (the number of telephone lines per 100 people) which is quoted at 5 per cent. Research done by the Research ICT Africa also shows Rwanda has the second highest mobile call tariffs in Africa, trailing Ethiopia. Rwanda has recently joined the East African Community (EAC). All the members states in this bloc (with the exception of Burund) have telecom markets which are quite superior to that of Rwanda. Safaricom of Kenya has a subscriber base of 7.6 million out of the estimated 10 million subscribers in the country. Tanzania boasts four GSM operators, while Uganda's subscribers with the recent registration of Warid and Hits telecommunications have an option of choosing between five operators by the end of this year. All three East African countries are connected to Celtel's `One Network coverage', a borderless network that allows subscribers to make calls at local rates and receive free incoming calls. This network is the first of its kind in the world and has won the company international recognition within the GSM association, a telecom club that harbors over 300 telecommunication companies worldwide. Rwanda would therefore need an alternative telecommunications company that can fully integrate subscribers into the EAC bloc – one which doesn't only concentrate on the transmission of voice, but also on transmission of data. One who will adopt third-generation (3G) mobile services in the country. In a recent statement, Rwandatel said: "We are looking for a strategic investor with capacity to develop the sector by improving the quality of services and meeting the ever increasing expectations of telecommunications market in Rwanda." Of all six bidders, there are only three which have profiles that match those of the telecoms mentioned above. The eventual winner of the bid would provide a highly competitive market for MTN Rwanda. V-Tel Holdings of Jordan and Bit Map Ltd of Singapore have hardly had any operations in Africa. Therefore, they have no experience working in an African setting and definitely don't know the market. Libya Africa Investments Portfolio for Africa (Lap Green) is a Libyan consortium reorganising the interests of investments owned by the Libyan government. The group, which has invested US$4 billion in cash and owns US$3 billion in assets, also owns Lap Green Networks Ltd who bought 69 per cent of shares in Uganda's national telecom operator, Uganda Telecom Limited (UTL). LapGreen Networks also owns Mali's Sahelcom and together with UTL's 700,000 subscribers, it would boast of about 900,000 fixed line and mobile subscribers in Africa. Vodacom and Celtel have both been identified as pan-African with regional interests in sub-Saharan Africa. Vodacom provides 3G GSM services to millions of customers in South Africa, Tanzania, Lesotho, Mozambique and the Democratic Republic of the Congo. The Vodacom brand is also a 50 per cent joint venture investment with the United Kingdom's mobile firm, Vodafone Group Plc. The same telecommunication company has a 40 per cent stake in Safaricom of Kenya. Celtel which is owned by Kuwaiti-based Mobile Telecommunication Company (MTC), operates in 15 African nations. The company which recently announced a re-branding rollout from MTC Kuwait to Zain International has also established a strong hold across the West African region. Celtel's Fayaz King told telecom regulators by the end of 2007, all 15 countries would be part of its One Network plan recently, at the 1st Mobile Roaming Conference in West Africa. Sources within the telecom circles say MTN Rwanda is planning to forge a regional free-roaming zone with Safaricom. According to sources, MTN Rwanda's chief executive, Themba Khumalo and his Safaricom counterpart, Michael Joseph, met at the sidelines of the annual GSM Conference in Nairobi recently and discussed the prospects. The other advantage Celtel and Vodacom would have over all the other four bidders, is the fact that both companies are subscribers to a US$ 235m project to build a fiber-optic submarine cable. This project would fulfill what the International Telecommunications Union (ITU) calls the `missing link' to 21 eastern and southern African countries by 2009. The project is meant to reduce international connectivity costs by two-thirds. With `Connect Africa,' an ITU sponsored communications summit set to be held in Rwanda next month, the bidding process of the new player in Rwanda telecom market has to be done in line with the interests of ITU. At this summit, different heads of state will have to make key decisions in the regulatory environment in order to approach the market and attract the business leaders, some of which will include these bidders. Rwanda could use this summit to show case its ability to do away with unfair monopolies that might hinder growth in her telecommunications industry. dkmusoke@newtimes.co.rw <mailto:dkmusoke%40newtimes.co.rw> http://www.newtimes.co.rw/index.php?issue=1298&article=1147 <http://www.newtimes.co.rw/index.php?issue=1298&article=1147> ***********************