Airtel faults CA Sh2bn licence fees after Yu Mobile buyout

Airtel Kenya CEO Prasanta Das Sarma at a past function. FILE PHOTO | NMG
Airtel Kenya CEO Prasanta Das Sarma at a past function. FILE PHOTO | NMG 

Airtel Kenya has accused the Communications Authority of Kenya (CA) of dishonouring the agreement that led to the mobile phone firm’s purchase of Yu Mobile by disclosing a demand for $20.025 million (Sh2.06 billion) in spectrum fees after the acquisition.

Airtel insists that the CA had promised to merge its operating licences with the ones it purchased from Yu Mobile in 2014 for the $6.976 million (Sh718 million) it paid to acquire the rival firm.

Airtel claims that its newly-acquired licences are due to expire on January 27, 2025 but shortly after it paid the Sh718 million in December 2014, the CA shifted goalposts and demanded an additional Sh2.06 billion as a condition for renewing its operating permits.

The telecoms operator say it would have abandoned the Yu Mobile deal had the regulator disclosed it would demand separate spectrum fees of Sh2 billion.

“The decision (Sh2 billion demand) came after the applicant had helped clean up the problem of Essar’s imminent liquidation and the amount of $20.02 million cannot be recovered due to the fact that Essar has long exited the Kenyan market,” says Airtel in fresh court documents. Indian giant Essar owned Yu Mobile.

Besides the Sh718 million, Airtel says it spent billions of shillings on the acquisition of struggling Yu Mobile, including settling Essar’s outstanding fees to the CA, bank and supplier debts as well as acquiring its staff.

It accuses the CA of treating the buyout as a normal acquisition, arguing the deal prevented an economic crisis and confidence fears in the telecoms sector with the imminent collapse of Yu Mobile.

Under the deal, Safaricom #ticker:SCOM acquired Yu Mobile’s network, IT and office infrastructure while Airtel absorbed Yu’s subscribers and operating licences.

The CA says it is Safaricom that inherited Yu Mobile’s frequency spectrum licence and not Airtel.

It argues the Sh718 million Airtel paid was for operating licences inherited from Yu Mobile and not the spectrum licences.

But Airtel in fresh court documents says both the spectrum and operating licence are merged under the current licensing regime and that the CA did not disclose that the two had been split while negotiating the Yu mobile deal.

Airtel has asked the court to order the regulator to issue it with a fresh licence expiring on January 27, 2025.

The suit will be heard on November 6.