[kictanet] Airtel’s Sh2.1bn licence renewal fee splits CA board

[Mwendwa Kivuva]

http://www.businessdailyafrica.com/Corporate-News/Airtel-Sh2-1bn-licence-renewal-fee-splits-CA-board/-/539550/2894480/-/vvpw8s/-/index.html

Matters came to a head during the CA’s board meetings held on Monday and
Tuesday last week after the Treasury and a number of non-executive board
members insisted that Airtel must pay the Sh2.1 billion fee for the licence.

Telecommunications firm Airtel’s quest to get its frequency licence renewed
without paying the required Sh2.1 billion fee has split the Communication
Authority Kenya (CA) board, adding a new dimension to the seven months
battle to get Kenya’s second-largest operator on a firm footing in the
market.
Francis Wangusi, the CA director-general, sparked the controversy with a
letter he wrote to the authority’s board advising withdrawal of a demand
notice the authority had sent to Airtel asking for payment of the Sh2.1
billion fee.

The advisory marked an about-turn by Mr Wangusi, who had previously
insisted that Airtel pays Sh2.1 billion for a 10-year frequency spectrum
licence following the expiry in February of the one it was awarded in 2000.
Airtel paid a $55 million (Sh4.7 billion) fee for its initial 15-year
licence.

Matters came to a head during the CA’s board meetings held on Monday and
Tuesday last week after the Treasury and a number of non-executive board
members insisted that Airtel must pay the Sh2.1 billion fee for the licence.

Mr Wangusi’s position is supported by CA chairman Ben Gituku and Joseph
Tiampati, the principal secretary in the Ministry of Information and
Communication.

Mr Wangusi reckons that the authority’s pursuit of the frequency spectrum
fee from Airtel may expose the agency to court battles it stands a high
chance of losing.

This, he says, is because the authority did not include the settling of
initial frequency spectrum licence fees in the conditions it set for Airtel
when the telecoms operator was acquiring Essar Telecom’s properties.

“Management is of the view that considering the events that have taken
place thus so far based on the legal analysis, it would be more prudent to
withdraw the demand for $20,025,000 from Airtel,” Mr Wangusi said in his
note to the board.

If adopted, Mr Wangusi’s advisory would deny the Treasury the Sh2.1 billion
it was expecting from the deal at a time when the government is in dire
need of cash to meet the ever rising expenditure demands.

Safaricom
<http://www.businessdailyafrica.com/stocks/-/1322440/1394278/-/shkse6/-/index.html>
last
year paid Sh2.3 billion to have its licence renewed — an amount that was
pegged on the Sh2.3 billion yuMobile paid in 2003 to enter Kenya as the
fourth mobile operator.
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