[kictanet] [Skunkworks] It's a new twist for Econet Wireless

[Mike Theuri]

David,

These are good questions, and several remain to be unravelled. There are
many
dimensions to this issue. One party clearly has a public relations scoop
over the
other as certain reporters who masquerade as 'correspondent' gleefully write
about
one entity in a one sided manner that borders on glorification.

If KNFC's arguments are accurate, it begs the question of how a minority
shareholder
made a decision on behalf of an entire company without the knowledge of the
other
shareholders so as to 'withdraw' the case.

I doubt that KNFC want to pocket the difference, just the other day none
other than
Vice President Awori promised to deliver the licence to KNFC/EWK on Ushirika
day
while addressing members of the Co-operative movement.

This was reported in sections of the media (note the lop sided coverage) and
KNFC
was quoted as stating they were prepared to go it alone (per KT and Capital
FM).

You are right on the mark, it is imperative to use lawyers to avoid these
types
of controversies or where token board members (now former) of a company are
compromised and terrorize an entire movement. KNFC were brought on board by
a
well meaning Kenyan who was then an executive at the foreign entity, he was
apparently
inspired by how Empowerment programs were working in South Africa. KNFC
has the capacity to raise the capital. KNFC has been derailed several times
by
powerful outside forces who continuously meddle in its attempts to progress.
This
licence is fully capable of being wholly owned by Kenyans and Kenyans alone
if
need be through a combination of grass root equity through the cooperative
movement, private equity,debt financing and a build, operate and transfer
arrangement.
What KNFC needs is an advisory firm with experience preferably with
transactions in
South Africa's empowerment models.

As to the retention of the funds, it will be interesting to see how the
Government
handles this debacle. As it is, if the tender rules were to have been
followed to the
letter the licence ought to have been cancelled over 2 years ago according
to the
tender rules and the Kenya Communication Regulations.

========
Page 16, Section 4.5 of the Tender document:
The pre-qualified mobile operators consortia shall not be allowed to change
the
character of their composition by either substituting any of the
pre-qualified
operators' consortia with a new member or by submitting separate bids.

==========
Page 90 of the 3rd mobile Tender document regarding cancellation was also
appropriately applied in the case of the Second National Operator
in cancelling Vtel's bid where VTel was willing to pay but its local
partners were not:

(iii) if the Applicant, after having notified the Commission of
its acceptance of the licence, fails to pay the licence fee
fully within 60 (sixty) days after such notice;

http://www.telegeography.com/cu/article.php?article_id=16405

The East African reported on November 1, 2004, the following:

However, the licence was not awarded as the fee was not raised by the
October 17 deadline. But neither did the Communication Commission of Kenya
(CCK) invite fresh tenders or award the licence to the second highest bidder
as required by the Kenya Communications Act. Instead, it decided to give the
Kenya National Federation of Co-operatives another 30 days – beginning
October 18 – to raise its share of the amount required. Econet has already
paid its share of $15 million of the licence fee.
=========

Perhaps VTEL should get a similar deal no matter how unorthodox and get a
second shot at the licence now that the regulator has established a
precedent??
Well that remains to be seen.


Mike Theuri

On 7/25/07, David Kiania | Asentric Consulting Ltd <kianiadee at gmail.com>
wrote:
>
>
> Herein lies poignant lessons for anyone looking to partner for whatever
> reason. First avoid Farmers and amorphous bodies their interests are as
> diverse as their membership. KNFC nees to tell us since EWK will be
> settling the legal costs of the suits that they have terminated, what %
> of the legal bills will they foot. Secondly can they or can't they raise
> their portion of license fee which was a point of contention ab initial.
> From what I gather, they are broke and are not in a position to so of
> the US$ 27m license fee, Econet International has already paid $12M
> being the majority shareholder can KNFC raise $15M or are they seeking
> to auction their shareholding and have and pocket the surplus. Me thinks
> they want to cash out and pocket something.
>
> Last but not least, the outcome will also be influenced by their
> shareholders' agreement on liquidation and ownership transfer. Herein
> lies the other lesson, during incorporation get a good lawyer, not a pal
> because they will cost you nothing. From my experience get a lawyer (in
> their personal capacity) with one of the big firms (K&S, HHM, etc) they
> have great incorporation templates and are thorough not to mention they
> know how to get things done right.
>
> I have a feeling that EW Kenya may carry the day, after all the govt
> needs to fund the Kshs 400 billion budget deficit  and are in not
> position to refund the $12M already paid, it's an election year :) Watch
> what happens carefully .
>
> Kiania D.
>
>
>
> Mike Theuri wrote:
> > It's a new twist for Econet Wireless as it prepares to roll out its
> > services
> > Written By:Emmanuel Toili   , Posted: Tue, Jul 24, 2007
> >
> > It's a new twist for the third mobile service provider Econet Wireless
> > International after the Kenya National Federation of Co-operatives
> > limited-
> > KNFC
> > threatened to take a court injunction to stop the rolling out of the
> > mobile
> > services.
> >
> > Interim Chairman Stanley Muchiri said the Federation had neither
> > withdrawn
> > two
> > court cases that prevented Econet Wireless International from
> > providing the
> > mobile services.
> >
> > The government and Econet Wireless International had last week signed a
> > settlement agreement and agreed to settle the contentious issues out of
> > court.
> >
> > KNFC who are allegedly the majority shareholders of Econet Wireless
> > Consortium,
> > want the Communications Commission of Kenya - CCK, to issue them a
> > license
> > as a
> > partner.
> >
> > http://www.kbc.co.ke/story.asp?ID=43974
> >
> > ------------------------------------------------------------------------
> >
> > _______________________________________________
> > skunkworks mailing list
> > skunkworks at my.co.ke
> > http://ole.kenic.or.ke/mailman/listinfo/skunkworks
> > Blog http://skunkworks-ke.blogspot.com
>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://lists.kictanet.or.ke/pipermail/kictanet/attachments/20070725/e08eef9a/attachment.htm>