Companies

Investors in talks with Wananchi on data services subsidiary stake

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Wananchi Group chairman Richard Bell. PHOTO | FILE

A consortium of local and foreign investors are looking to buy an undisclosed stake in Wananchi Group’s corporate data services that fall under telco’s subsidiary Wananchi Business Services.

If concluded, the transaction could see Wananchi split, with existing shareholders likely to retain the home entertainment and communication business under the Zuku brand.

A source privy to the ongoing negotiations said the consortium, whose composition was not immediately clear, has hired South African consultancy Systems House to conduct due diligence on the subsidiary.

Wananchi Business Services is made up of three firms — SimbaNet, iSAT Africa and Wananchi Telecommunication — that offer wholesale Internet, video connectivity and data security to enterprises and governments in the region.

Roy Blatch, founder of Systems House and Santiago Benedit, Wananchi Group chief executive, both declined to comment on the matter.
Our source, however, said the due diligence exercise is at an advanced stage.

“The due diligence process has been going on for a while. I cannot, however, at the moment disclose the composition of the consortium that is interested in the Wananchi Business Service due to the confidentiality clause,” said the source who asked to remain anonymous.

Current Wananchi Group shareholders include Emerging Capital Partners, East Africa Capital Partners, Altice, Liberty Global, Prudence Holdings and Helios Investments Partners.

Individual shareholders of Wananchi Group are Mark Schneider, Richard Bell, Richard Essex, Ali Mufuruki and Jimnah Mbaru, who are also the founders of the private equity fund EACP.

Wananchi has in the recent past raised billions of shillings, with the latest round being in October 2014 where it raised Sh11.6 billion from a number of investors including PE firm Helios, Altice SA, Liberty Global, Emerging Capital Partners and ATMT.

READ: Helios buys stake worth Sh3.6bn in Wananchi Group

Latest data from the industry regulator, the Communications Authority of Kenya (CA), indicates Zuku has a 53 per cent share of the fixed Internet market, followed by Liquid Telecoms at 16.50 per cent, and Safaricom at 9.2 per cent.

The three units of the Wananchi Business Services that the new investors are eyeing have footprints across East Africa.

SimbaNET Limited is a licensed public data operator and provides voice, video, data and Internet connectivity to businesses in Kenya, Tanzania, Uganda, Zambia and Malawi.

It also provides value added services such as data security, messaging system, data centre, PABX, colocation, cloud services, domain and web hosting and registration, conferencing, among others.

iSAT Africa, through its satellite teleport services, offers Internet, voice and video connectivity to enterprises, governments, carriers, media and broadcast.

Wananchi Telecommunication Ltd is a tier 1 Internet carrier in East Africa, meaning it charges other Internet service providers for accessing its infrastructure.