Brokers position themselves ahead of showdown on Safaricom’s licence expiry

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Backroom chess moves have started between Kenya’s biggest mobile phone company and brokers connected to the government as they both size each other ahead of a mega showdown over Safaricom’s licence which is expected to expire in June this year.

Insiders from both sides have told that the maneuvres which began a few weeks before last year’s elections in August have now entered the home stretch with the appointment of Adil Khawaja as Safaricom’s chairman.

“Everything has been put in place starting with the key players, what we are waiting for is the whistle for the real drama to start. Just wait and see,” a source aware of what is going on told us.

Khawaja, a key Ruto ally who co-owns the popular Thika Road Mall (TRM) alongside Shakira Adil Khawaja took over from John Ngumi, a corporate titan, citadel of power, influence and wealth, especially during the Uhuru years.

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It is instructive to note that Ngumi came into Safaricom as chairman in July last year, exactly 12 months before its licence was set to be renewed. At that time, the power players within the Uhuru administration which was just weeks away from ceding power were sure that Azimio La Umoja candidate Raila Odinga was going to win the election.

For this reason, they picked Ngumi to replace Michael Joseph believing that in him they had a man who had for years been one of Uhuru’s key pointmen in state corporations to lead the negotiations for the new licence.

The Government of Kenya is one of the two largest shareholders of Safaricom through Treasury which owns 35 percent. The other main shareholder is Vodacom with 35 percent while 25 percent is owned by investors in the Nairobi Securities exchange.

It was therefore imperative to have someone who can play ball when the rubber meets the road serving as Safaricom’s chair. Adil’s first order of business however will be to determine if the company’s CEO Peter Ndegwa’s contract will be renewed in March just in time for negotiations Safaricom’s licence.

A licence for a company as big as Safaricom is big business for whoever is involved in the negotiations. The biggest factor is not even the amount of money that Safaricom will be billed by the government but the fact that this is Kenya and there are millions of shillings to be made by whoever is lucky enough to be inside the negotiations.

Those in the know say that Safaricom had hoped that the state will automatically roll over its spectrum as it negotiates for its licence fees. This request has been declined in principle by Communications Authority chair Mary Wambui Mungai.

Spectrum refers to the invisible radio frequencies that wireless signals travel over. Those signals are what enable us to make calls from our mobile devices, browse the internet and do everything on our mobile devices as it connects them to signal towers.

As if that is not enough, faceless state operatives who want to raise the stakes have insisted that Safaricom bids afresh for its license after the 10-year new term along with other firms, raising the possibility of the firm losing the licence to a rival bid.

At the moment, Safaricom has made the issue a top secret for fear of creating panic among its subscribers as it negotiates with government officials on how to avert the looming crisis. Sater operatives have however refused to back down and have said it’s ‘game on.’

Airtel Kenya was last year forced to part with pay Sh1.1 billion for a new 10-year year licence as part of an out-of-court settlement after a lengthy legal battle with CA. The Sh1 billion was an addition to a Sh2.2 billion fee for the current licence it has been using since 2015, bringing the total payment to the Communications Authority of Kenya (CA) to Sh3.4 billion.

“This $30 million (Sh3.4 billion) investment reflects our continued confidence in the tremendous opportunity inherent in the Kenya market,” the telco’s parent firm Airtel Africa said in disclosures to the London Stock Exchange where it is listed.

Wambui was among the very first people that Ruto hired in his government replacing Gilbert Kibe who left in a huff to ‘pursue other interests’ Like Ngumi at Safaricom, Kibe was appointed by Uhuru to head CA for a three-year term during the last weeks of Jubilee being in power.

“Due to personal interests that I wish to pursue, I hereby tender my resignation as chairman of the Board of Directors of the Communications Authority of Kenya with effect from 01 December 2022,” said Kibe while handing in his resignation.

With Wambui controlling things at CA, Adil at Safaricom and a possibility that Peter Ndewa’s contract at the C Suite of the mobile giant hanging in a balance all the chips have been positioned on the chessboard for the once-in-a-decade showdown between the state and Safaricom.

In 2013, CAK which was then called the Communications Commission of Kenya (CCK) asked Safaricom to pay $27 million (Sh2.3 billion) before renewing its operating licence. Safaricom’s first licence was issued on July 1999 for a term of 15 years at a fee of $55 million (Sh4.7 billion)

In order to up the stakes just like what is happening now, CCK tied the renewal on Safaricom meeting certain quality standards.

“The renewal shall be dependent on Safaricom’s commitment to adhere to the set minimum quality of service standards by June 30 2014,” said CCK at that time adding that, “Safaricom has failed to meet the quality standards over the past three years.”

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