Ownership changes leave Merali as face of Kencell

Kencell, the mobile company indicated in the Alcatel-Lucent court documents, operated in Kenya but changed hands and until recently was known as Zain Kenya. It is now Airtel Kenya.

Sameer Group, local entrepreneur Naushad Merali’s investment company, jointly launched KenCell Communications with its French partner, Vivendi in 2000 upon payment of a $55 million licence fee for GSM services in Kenya.

Mr Merali owned a 60 per cent share in the company, which was initially Kenya’s leading mobile company in terms of subscribers.

KenCell entered a two-horse market alongside its long-term rival Safaricom, enjoying the fruits of being first-movers in the rapidly growing Kenyan mobile market which has grown from 40,000 in 2000 to more than 18 million subscribers today.

However in 2004, Vivendi pulled out of the firm as it struggled to avoid bankruptcy following the technology crash of 2002.

Local shareholder, Mr Merali, then engineered a boardroom coup that eventually saw him play off global telecoms giants against each other for Vivendi’s stake in Kencell.

Having gotten Vivendi to sell him their 60 per cent stake in Kencell for $230 million in one room of his offices, Mr Merali sold the stake to his preferred suitor Celtel for $250 million in a neighbouring room, pocketing the difference in prices, which amounted to a cool Sh1.6 billion.

The deal marked a turning point for the entrepreneur, who first made his living as a financial manager, as he ceded his stake in the mobile firm from 40 per cent in 2004 to 20 per cent when Zain bought Celtel in 2008, and more recently, to five per cent just before Zain sold to the company’s current owner Bharti.

In June this year, Bharti Airtel announced that it had completed a $9 billion purchase of Zain Africa.

The largest ever cross-border deal in emerging markets, has created the world’s fifth largest mobile company.