Safaricom Walks Away from Plans to Buy Yu Mobile Network Infrastructure
Published on: 4th Apr 2014
By: Ian Mansfield
Kenya's Safaricom has dropped out of plans to buy the network infrastructure assets of smaller rival network Yu Mobile following a disagreement about the regulatory conditions.
Yu Mobile put its mobile network and customer base up for sale last month as it decided to close down operations in the country. The mobile network is owned by India's Essar Telecom.
The regulator had imposed a requirement that Safaricom allow its M-Pesa agents to act on a non-exclusive basis, and support mobile money services from other mobile networks.
Safaricom's CEO, Bob Collymore said that a requirement to have it open up its M-Pesa agent network had raised a lot of concern for the company.
The issue of opening up the M-Pesa network is also subject to a court case by Bharti Airtel.
"I said last week and still maintain that Safaricom is no longer interested in this deal. The decision we must make is whether to come back to it or not," said Collymore.
If the courts rule that mobile money agents can offer services from multiple mobile networks, that would presumably remove the regulatory concern as well, as the issue would then be moot.
In related news, Bharti Airtel is also seeking regulatory clarification over its plans to buy Yu Mobile's 2.7 million customer base. The regulator is requiring that Airtel pay Yu Mobile's outstanding mobile operator license fees, and Airtel is seeking clarity on the payment terms.
Kenya has four mobile operators Safaricom, Airtel, yuMobile and Orange. Consolidation is seen as necessary for the two smaller operators which are both losing money to compete with the dominant Safaricom.