Naushad Merali (pictured) is set to get a new partner at the Kenya Data Network (KDN) after the majority shareholder in the internet firm sought approval from the communications regulator to sell its shares to an undisclosed company.
Naushad Merali is set to get a new partner at the Kenya Data Network (KDN) after the majority shareholder in the internet firm sought approval from the communications regulator to sell its shares to an undisclosed company.
South Africa’s Altech, which owns a 60.8 per cent stake in KDN, last week sent the Communication Commission of Kenya (CCK) a notice asking the regulator not to object to sale of a majority stake to a strategic investor.
Details on the transaction remained sketchy, but sources familiar with the deal reckon Altech is selling its stake to a UK firm to shore up the Kenyan operator facing stiff competition from rivals Wananchi Telecoms, AccessKenya and Telkom Kenya.
“What I can confirm is that we (CCK) have received a letter seeking no objection from Altech, but I don’t know who they are selling to,” said Francis Wangusi, the director general of the CCK, without giving details.
The fact that Altech is the one seeking regulatory approval for the deal has led analysts to believe that the South African firm ceding its shareholding in the telecoms infrastructure rather than creating new shares to accommodate the new partner.
Altech has blamed its poor performance on its East African and West African units, which it has placed on auction block. It has inked an agreement to sell 75 per cent of its interest in Altech West Africa.
Industry insiders said the South African firm had an agreement to sell a significant stake to Liquid Telecommunications—a UK based firm that offers data, voice and wholesale Internet in developing countries. “The agreement was signed by our UK firm and I cannot provide you with the finer details as it involves a listed firm,” a senior executive of Liquid Telecommunication told the Business Daily from South Africa when asked about the KDN deal.
“Altech cannot comment on speculation. We are currently trading under a cautionary announcement,” Shenandoah Janse van Rensburg, the group executive for marketing and communication, said in an e-mail response.
“Discussions concerning the introduction of strategic partners into the Altech group’s East African operations continue and we will advise shareholders and the market of progress in this regard as soon as we are in a position to do so.”
Besides Altech, the other key shareholder in KDN is Sameer ICT, associated with Mr Merali.
Sameer owned 96 per cent of KDN while its former CEO, Kai Wulff, held a four per cent stake, until 2008, when Altech bought a 51 per cent share in the company in a deal estimated at Sh5.2 billion. The South African increased its ownership to 60.8 per cent in 2009.
KDN says it has in the two years faced lower revenues and profits on high cost and stiff competition, which has seen the operator lose big contracts, including the multi-million- shilling contract with Safaricom.
The firm’s market share dropped to 28.9 per cent in June from 36.2 per cent in September last year based on subscribers, but it remains the top Internet firm in Kenya ahead of Wananchi Telecoms and AccessKenya.
Wananchi seems to be the biggest beneficiary of the market share shifts after it hit 27 per cent in June from 14.25 per cent last September.
