Liquidation order a final blow for mobile licence owner
Mobile phone firms Safaricom and Airtel are set to pay billions to acquire the yuMobile. FILE
The liquidation of the Kenya National Federation of Cooperatives (KNFC), which once claimed majority stake in a mobile phone operating licence that finally became yuMobile, has been extended by one year.
The acting commissioner for cooperative development P. L. Musyimi in a gazette notice on Friday said KNFC would get an extension to complete the liquidation, hammering the final nail on the firm initially thought to own 80 per cent stake in the coveted licence.
The liquidation order was given for the federation alongside seven other saccos — Chuka FCS, Uchaguzi, Trident, Ulinzi, Tena, Karai and Woodventure.
The acting commissioner further said liquidation would begin for several other saccos including Bia Bora, Cent, Nairobi Railway Consumers Cooperative Society, Saga and Fresh Foods.
KNFC was a little-known entity before it burst into the limelight in September 2003 with the announcement that a consortium it dominated (with 81 per cent stake) had won the tender to operate the third mobile phone network called Econet Wireless Kenya (EWK).
The other three in the consortium were Econet Wireless International (10 per cent) owned by Zimbabwean Strive Masiyiwa, Peter Kibiriti’s Corporate Africa (4.5 per cent) and Manga Mugwe’s Rapsel with 4.5 per cent stake.
The very idea of a federation, earning only small fees from its member cooperatives, to invest billions in a capital-intensive telecommunications business caught many by surprise.
But strains began to show by early 2004. The project had not taken off and KNFC began to reveal that it was broke and could not pay for its portion of the required money to the tune of $12 million.
Financial hurdles
The federation attempted to overcome the financial hurdle by sending a team to meet the leaders of various co-operatives around the country.
It even incorporated Ushirika Communications Ltd to sell its investment plan and even took out newspaper advertisements on planned visits to Central, Western, Rift Valley, Nyanza, Eastern and Coast provinces.
It was never known what became of the visits, but at the end of the day it never got the cash it was looking for. Up to mid-2000s, cooperatives were run-down institutions that hardly met their members’ expectations.
A number of court battles ensued where KNFC was resisting attempts to throw it out of the consortium.
At one point the federation received backing from the ministry of Information and Communications, which cancelled the licence before a court later ruled that the move was illegal.
Econet Wireless Kenya ended up being the majority shareholder in the company that was eventually bought by India’s Essar Communications, owners of the brand yuMobile.
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