[kictanet] MPs move to court to block Safaricom IPO, while in Rwanda MTN needs competitor that matches their profile

[alice]

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>

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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>

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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 at 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>

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