Safaricom shareholders agree yuMobile buyout

By Tom Jackson, South Africa

Shareholders of Kenya’s leading telecom Safaricom voted in favour of the company’s acquisition of the network, IT and infrastructure of smaller rival yuMobile at the firm’s annual general meeting (AGM), meaning the deal now only requires regulatory approval to proceed.

BizTechAfrica reported earlier this month Safaricom along with Airtel had reached agreement over the US$120 million acquisition of yuMobile from Essar Telecom, with Airtel acquiring the company’s brand and subscribers.

The deal has been a protracted one, first becoming public in March but subsequently looking to have fallen through after Safaricom withdrew because of the terms attached to it by the Communications Authority of Kenya (CA). The company, however, re-entered the deal in August.

Shareholders have now given their assent, with the acquisition now set to be reviewed by the CA and the Competition Authority of Kenya (CAK). Safaricom chief executive officer (CEO) Bob Collymore told the AGM the company’s quality of service (QoS) - much criticised by consumers and the regulator in the last year - was one of the major reasons for the acquisition, with Safaricom acquiring a large amount of spectrum from yuMobile.

“The quality of service has been one of the pain points for us all at Safaricom,” Collymore said. “Just to paint some context around this issue, all mobile network operators have broadly the same amount of radio spectrum. What this means is that we have a disproportionately small amount of spectrum relative to our competitors given that we serve our 22 million customers compared to our competitors who have less than 6 million customers.”

He said the yuMobile acquisition was part of a strategic network improvement scheme that also sees the company invest KES27 billion (US$303 million) each year.

Collymore added Safaricom will also be gaining more spectrum from the Kenyan government for US$75 million, which will be used to defray some of the costs of the implementation of the National Police Service project, which Safaricom has been contracted to undertake.

“The addition to the current spectrum will result in a marked improvement in quality of service on the Safaricom network,” he said. “It will also pave the way for the introduction of 4G (LTE) services which will provide faster internet for our customers. With this, I believe we will truly have the best network in Kenya.”

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