All Kenyan telecom operators will be required to cede at least 30 percent shareholding to locals by 2024 according to a new licensing policy.
The policy unveiled last week by ICT cabinet secretary Joe Mucheru will mostly affect Airtel Kenya, which had been exempted since March 2013.
Currently, Airtel is owned by India’s Bharti Airtel, but will be required to sell at least a 30 percent stake to locals by March 2024.
“An existing licensee that had a waiver granted under the ICT Sector Policy Guidelines of 2006 will have three years to meet the local equity ownership threshold with effect from the date of this Notice,” said Mucheru in a Gazette notice on Friday, April 9.
The local ownership threshold had been capped at a minimum of 20 percent since 2008, but now will be 30 percent in a move aimed at encouraging local ownership of ICT firms.
Non-compliant firms will have an option of listing shares at the Nairobi Securities Exchange (NSE) or sell a stake directly to billionaires or high-net-worth investors.
The move in Kenya seems similar to another one in Uganda where telecom operators are required to list at least 20 percent of their shares on Uganda Stock Exchange (USE) by October.
Safaricom, which is listed in NSE, will not be affected by the move since locals own over 50 percent of the firm.
On the other hand, Telkom Kenya is 40 percent owned by the government while private equity firm Helios Investment Partners owns the remaining 60 percent.
In the latest transaction involving Airtel Kenya shares, businessman Naushad Merali sold his 5 percent stake for Ksh738 million in 2011, putting the value of a 30 percent stake at Ksh4.5 billion.
Airtel has been unable to find a local buyer due to its valuation of shares, occasioned by loss-making, the reason it was given a grace period by the government.
Airtel Kenya posted a combined loss of Ksh3 billion in the year to March 2020, raising its cumulative losses to above Ksh70 billion.
In the current framework, Airtel will be allowed to seek another waiver or extension of time for compliance.
Airtel started in Kenya as KenCell Communications in 2000 in which Mr Merali owned 40 percent through Sameer Group while French firm Vivendi owned 60 percent.
Three years later, Mr Merali bought Vivendi stake in KenCell at $230 million (Ksh23 billion) and sold it to Celtel International the same day for $250 million (Ksh25 billion), earning a profit of $20 million (Sh2.16 billion).
In 2008, he sold 20 percent stake to Zain. A year later, he sold 15 percent in 2009 for $63.75 million (then Ksh6.8 billion).