REGULATIONS

New CA licence law opens up shareholding to Kenyans

In Summary

• From an investors perspective, the arrangement pushes equity participation for Kenyans which has been a challenge in the past due to high upfront capital requirements.

• Applicants whose fee is below Sh1 billion will also not benefit from the new practice.

• The law is a shift from the old practice where telcos were required to pay the fee upfront before getting the license.

Communications Authority of Kenya Director General Francis Wangusi.
Communications Authority of Kenya Director General Francis Wangusi.

Spectrum license fee above Sh1 billion can now be paid over a period of 10 years as noted in the Miscellaneous Amendment Act of 2018.

The law, sponsored by Industry players became effective early this year and is a shift from the old practice where telcos were required to pay the fee upfront before getting the license.

Speaking to the Star on phone, Communications Authority said for firms to benefit from the law should have 51 per cent Kenyan shareholding, failure to which they will be required to pay the fee upfront.

Applicants whose fee is below Sh1 billion will not benefit from the new practice.

“The amendment is aimed at shoring up fortunes of Kenyans as investors will be required to participate and keep the Kenyan shareholding, dropping out of the shareholding means the whole arrangement is revoked,” CA said.

From an investor's perspective, the arrangement pushes equity participation for Kenyans, which has been a challenge in the past due to high upfront capital requirements.

The Authority notes top among benefits of the law is provision of a longer period to operate with less capital and requirements of a Kenya participation at 51 per cent giving dividends to Kenyans.

The authority is also seeking an amendment of laws touching on the broadband industry including enforcing infrastructure sharing.

This is expected to be witnessed more when the regulator releases the final report on the dominance in the sector.

Last year, at least 10 firms applied to get a share of the 700 MHz spectrum band which has paved way for the high-speed 4G internet and mobile phone services. The spectrum band was split into three blocks.

In February last year, Airtel, the second market leader, paid about Sh2.53 billion for the 800MHz licence fee for high-speed 4G Internet spectrum.

Going by the new law, it means that for Airtel to pay the fee in a period of 10 years, the Indian owned firm should release at least 51 per cent of its shares to Kenyans.

However, if it does not, it should pay the fee upfront. According to the National Broadband Policy, CA is currently seeking Sh111 billion for the roll-out of broadband infrastructure in the country.

The money is aimed at facilitating the universal roll-out of high-speed fixed broadband.