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Airtel Kenya permit expired, operating under Essar licence

Communications Authority of Kenya director- general Francis Wangusi. PHOTO | FILE
Communications Authority of Kenya director-general Francis Wangusi. PHOTO | FILE 

Airtel Kenya is operating under the licence previously held by Essar, which it bought out last year, as it’s permit which expired in February is yet to be renewed.

The telecommunications firm had until this February to pay Sh2.3 billion for a 10 year-licence following the expiry of its initial permit that was issued in 2000. Airtel had paid a $55 million (Sh4.7 billion) fee for its first 15-year licence.

The Communications Authority of Kenya (CA) yesterday said it was still considering “a number of issues” before renewing Airtel’s licence.

“The licence renewal by Airtel has been submitted to the authority and is under consideration. Indeed, the Airtel licence expired in February 2015 and the entity is now operating under the Essar Telecom Kenya Limited licence,” said the CA director general Francis Wangusi in response to the Business Daily’s queries.

Airtel acquired yuMobile subscribers last year and its operating licences (the 15-year licence expires in 2023), while Safaricom acquired yuMobile assets that include the building that houses Essar, located in Westlands, and its frequency spectrum. 

The acquisition means that although Airtel’s licence has expired, it still owns another one.

What is not clear, however, is if CA can swap Essar’s licence to enable Airtel Kenya continue its operations without paying any renewal fee. Currently Bharti Airtel operates two brands in Kenya, Airtel and yuMobile.

“Given the various issues that need to be considered in the licence renewal including the acquisition of Essar Telecom among other conditions, the renewal is being carefully considered to ensure continuity and conformance with the laws of Kenya,” added Mr Wangusi.

Airtel Kenya had not responded to the Business Daily’s questions by the time of going to press.

The Sh2.3 billion fee is tied to what yuMobile paid as Kenya’s fourth mobile operator in 2003.

Safaricom last year paid an equal amount to have its licence renewed, meaning that if Airtel pays the fee then CA would have earned Sh4.6 billion in the past two years. The renewal fee is ordinarily charged in addition to other annual payments like the spectrum fee, compliance and local authority dues.

The amount is likely to weigh heavily on Airtel given that it is yet to break even and has committed to spend close to Sh20 billion in the next three years on infrastructure expansion and upgrade.

In a previous interview with the Business Daily, Airtel Kenya said it was counting on its parent company to settle the Sh2.3 billion licence renewal fee.

The renewal is also tied to meeting quality services targets set by CA. All the four mobile operators; Safaricom, Airtel, Orange and yuMobile failed to meet the minimum quality of voice service standards in the year to June.

The CA expects the operator to achieve a score of 80 per cent on the eight indicators including speech quality, completed calls, call success rates and call drop rate.

Safaricom, Airtel and Telkom’s Orange tied on a score of 62.5 per cent in the year to June while yuMobile had a 50 per cent rating.