TEAMS looks set to confirm financing and start operations in June 2009
Although the wrangling is not yet over, the Kenyan Government’s international fibre project looks set to get its financing and is promising a May or June 2009 start date, more or less identical to its rival Seacom (see story below). Despite the arguments over where the money will come from, it looks as if it will be able to come up with the financial guarantee asked for by the main contractor Alcatel Lucent.
The project costs are expected to be US$130 million for a system with an initial capacity of 120 Gbps although this can, with additional annual payments, be upgraded to 1.28 Tbps.
Currently shareholding is split between three categories: anchor shareholders, other larger shareholders and the smaller shareholders. The anchor shareholders are the Government of Kenya (20%) and Safaricom (30%). Given that the Kenyan Government still owns a majority in the latter, it is effectively the majority shareholder.
The other larger shareholders had to pass a three part test: they needed to be currently licensed operators, have operations in Kenya and put forward expressions of interest in shareholdings of no less than 10%. The remaining smaller shareholders will split the remaining capacity.
The larger shareholders, each getting 10%, are: Econet (who are under threat of having their licence removed if they do not meet a deadline later this year to start operations); Sameer Group-owned “carriers’ carrier” KDN; France-telecom owned former incumbent Telkom Kenya; and ISP Wananchi. Each will have to come up with their share of the deposit in early March. Other smaller investors, each offered 1.25% were Kenyan owned but South African based investment company Powertel, Gilat, Access Kenya, Vtel and Jamii. Powertel and Vtel are believed to have pulled out although the former is still pursuing discussions.
There is some continuing discussion as to whether Safaricom should give up a further 10% of its allocation to accommodate a shareholder anxious to have a much larger stake in the business.
A five person Board will be set up to run the company probably based on representation from two rather than three sets of shareholders, the Kenyan Government and Safaricom and the others. Etisalat is likely to be appointed to manage and run the cable.
A local row blew up over the Kenyan Government’s method of financing its share of the deposit via the regulator CCK. Not surprisingly, several of its Board members asked why it was the regulator that was acting as the finance vehicle for an international cable project. Nevertheless, Board agreement was reached to provide the 12% down-payment of US$9 million to Alcatel Lucent through CitiBank and the Government has increased CCK’s budget to make the transaction possible.
The East African