Airtel Kenya to pay local regulator $17.5M in out-of-court settlement

By Mark Kawalya

Airtel Kenya and the Communications Authority of Kenya have ended a seven-year-old legal dispute over an expired license in connection with a transaction involving the Essar group. The parties reached an out of court settlement that will see the telecom pay $17.5 million to the telecommunications regulator to renew their license. Accordingly, the sum of monies will be paid in installments over a period of two years. 

“We’ve had this long-running dispute with Airtel over the Essar transaction. The dispute has been there for seven years, but I’m glad we’ve reached an agreement and it’s a great achievement for us,” Ezra Chiloba, CEO, Communications Authority of Kenya, said in an interview. 

He further added that “Taxpayers are guaranteed of receiving about Sh2 billion in the next two years. They came up with a payment plan, which we agreed on. The idea was to have this matter resolved so that they can also start focusing on investing properly in this particular space,” 

Airtel Kenya’s license allegedly expired in February 2015 and a year earlier Airtel Kenya had paid $6.97 million to acquire yuMobile from Essar Telecom Kenya. At the time of the acquisition Airtel Kenya claimed that the Kenyan telecom regulator had accepted to merge is operating license with yuMobile. However, after the deal was completed, the regulator made demands for Airtel to pay $17.5 million to renew its license. 

The Communications Authority countered this by stating that since yuMobile’s license was not transferred upon the acquisition by Airtel Africa, the latter would have to pay to renew its license. 

Earlier Airtel had told the court that it would have abandoned the Yu Mobile deal if the regulator had disclosed it would demand separate spectrum fees of Sh2.15 billion before the row moved to the Court of Appeal.

A wholly owned entity of Airtel Africa, Airtel Kenya is seeking exception from a law requiring local shareholders to own at least 30% of telecom companies operating in Kenya by March 2024. In response, the Kenya government requested Airtel Kenya to first meet its license renewal obligations before waiving the local ownership rule. 

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