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Why Airtel, Telkom marriage rests on thin foundation : The Standard




Telkom, Airtel sign binding agreement to operate under joint venture.

The confirmation of the union of Airtel Kenya and Telkom may have excited the market on Friday but a closer look reveals the future might not be so rosy for the two firms, their consumers and to an extent the industry.

The last time a deal of this magnitude was struck in the country’s telecommunications sector was in 2014 when Safaricom and Airtel agreed to snap up Essar Telecom.
Valued at $100 million (Sh10.3 billion at current exchange rates), the deal saw Airtel acquiring the 2.7 million yuMobile subscribers at a cost of $6.9 million (Sh710 million) while Safaricom took up the frequency and phone masts.
In less than two years Airtel had lost virtually all the yuMobile subscribers it had gained, leaving it worse off than it was before the acquisition, in addition to a Sh2 billion legal dispute with the Communications Authority of Kenya (CA) that was only settled last year in the telco’s favour.

SEE ALSO :New mobile money system mooted amid M-Pesa crisis

Safaricom, on the other hand, got to keep Essar’s network infrastructure and frequency spectrum while at the same time getting rid of a competitor which, though struggling, was increasingly becoming attractive to young mobile users due to its rock-bottom rates.
Details of the merger announced on Friday indicate that Airtel might have gotten the short end of the stick yet again, casting doubts on the ability of the new entity, Airtel-Telkom, to present a serious challenge for industry leader Safaricom.
While the two entities have presented the deal as a union of equals, when viewed from certain angles, it appears as though it is tipped in favour of Helios – the Telkom Kenya majority owners.
The two firms are yet to give clarity on the shareholding structure with Helios’ front man Mugo Kibati serving as the chairman of the board of directors while Airtel’s CEO Prasanta Sarma will serve as CEO responsible for the day-to-day business.
In any corporate setting, management usually answers to a board, which represents the interests of the shareholders.

SEE ALSO :CA: Safaricom subscribers drop, Airtel gains

At 14.4 million customers, Airtel-Telkom seems like a stronger competitor to Safaricom than either company standing alone.
However, it will still be playing at a distant second to Safaricom’s 30 million-strong subscriber base, not to mention the latter’s significant head start in the mobile money, data, e-commerce and enterprise market segments.
And while Airtel has added four million new users to its subscriber base over the past year, these are users who also own a Safaricom line.
With the majority of Kenyan consumers having low incomes and thus limited on how much they can spend on telecommunication needs, Airtel’s new subscribers are unlikely to have a significant impact on the firm’s bottom line.
In addition to this, Airtel-Telkom will be devoid of many high-valued assets such as critical telecommunication masts, prime land in several counties and valuable contracts with the national and county governments.

SEE ALSO :Fierce battle as Telkom clash with Ghana’s GRA

Both Telkom and Airtel Kenya have in the past three years stripped off most of their assets, outsourcing critical services and leaving the mobile operators with bare minimums.
In a joint statement announcing the agreement last week, the companies said the merger excluded Telkom Kenya’s vast land holding, as well as some of its business agreements that include lucrative contracts to provide the government with network infrastructure and connectivity services.
“Telkom Kenya Limited’s real estate portfolio and specific government services will not form part of the combined entity,” said the statement.
Speculation has been rife that Telkom’s real estate portfolio inherited from its predecessor, Kenya Posts and Telecommunication Corporation will be transferred to a new entity co-owned by Helios Investment Partners and the Government, with the ultimate aim of selling the land.
Lease fees


SEE ALSO :Airtel launches new 1 bob voice campaign for the festive season

Besides holding on to the prime land, Helios last year sold the telco’s towers to American Towers Corporation (ATC) under a sale-and-leaseback transaction. Telkom Kenya now pays ATC lease fees for using the 723 towers.
Airtel is no better off, having retrenched dozens of “non-core” staff and getting rid of varied infrastructure in the past few years. In 2011, the firm outsourced its customer care and other back office functions to business process outsourcing firm Spanco.
Other functions that were outsourced included its network and engineering section that was transferred to Nokia-Siemens and information technology to IBM.
Again in 2014, Airtel sold its communication masts to UK infrastructure firm Eaton, in a deal where the mobile operator leased the towers back under a 10-year contract. The move was aimed at reducing its expenses. The firm then operated about 1,100 masts.
For Airtel Kenya, this will not be the first time it is signing a deal that will significantly alter its shareholding structure and brand. Over the last two decades, the operator has previously existed as Kencell, Celtel and Zain.
Since its entry in Kenya, India’s Bharti Airtel has in many instances floated the idea of exiting the market as well as from a number of other African countries where performance has been disappointing.
Telecoms analyst Peter Wanyonyi says Airtel-Telkom presents a weakened challenger to Safaricom as currently constituted, unless the two can provide the market with new major innovations.
“This is not really a merger. It is a takeover of Telkom Kenya by Airtel, which is backed by money and assets that Telkom Kenya cannot compete against,” he said.
“The takeover is testament to Airtel’s inability to eat fast enough into Safaricom’s dominance of the Kenyan telecom market.”
Combined, Airtel-Telkom will have 31.3 per cent of the market.
“This is less than half of the Safaricom market share, which is why Safaricom is unlikely to be unduly concerned by this merger – and why it will not threaten the market leader imminently,” says Mr Wanyonyi.
“But there may be more developments in the market, depending on the Airtel-Telkom’s strategy going forward.”
He says that while there is room for the new Airtel-Telkom to grow, it would be wiser for the two to steer away from trying to outdo Safaricom in areas it has strengthened its hold and instead look to new growth avenues.
“It has traditionally been difficult to attract subscribers to cross from one provider to another in Kenya” he says. “Mobile number portability never really caught on in the market, and the strength – and breadth of service – offered by Safaricom thanks to M-Pesa creates a strong base for retaining customer loyalty.”
This explains why many subscribers who might be unhappy with Safaricom’s service rarely ditch the mobile subscriber but would rather purchase an extra SIM card from rivals.
“The traditional weakness of Airtel and Telkom has usually been their inability to create value for a customer beyond just basic mobile services and copy-cat money transfer services that do not improve upon M-Pesa,” says Wanyonyi.
“Their focus on rivalling Safaricom service-for-service has also been a weakness, since it is obvious that they cannot be ‘more Safaricom than Safaricom itself’, so to speak.  I therefore do not foresee them becoming any more of a threat to Safaricom today than they have been up till now.”
This is compounded by the fact that Safaricom has spent an average of Sh25 billion each year for the last five years on building towers, laying fibre optic cable and other network infrastructure to secure market share for the future.

Airtel KenyaTelkomAirtel Telkom merger



BCCI: The bank ‘that would bribe God’



Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.

BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.

It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.

BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.

The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.

He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.

In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  

BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.

The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.

The bank had five branches countrywide and panic had gripped depositors on the state of their money.

Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.

It sent statements assuring depositors that their money was safe.

The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.

It was said that contact between CBK and Abu Dhabi was “likely.”

This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.

The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.

And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.

“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.

BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.

“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.


A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.

“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.

CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.

This was meant to stop Kenyans from making panic withdrawals.

For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.

In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.

Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 

The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.

Criminal culture

In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).

The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.

This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.

Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.

“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.

These included the Third World Foundation for Social and Economic Studies, a British-registered charity.

“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.

BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).

Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).

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Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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East Africa celebrates top women in banking and finance




The Angaza Awards for Women to watch in Banking and Finance in East Africa took place Online via Zoom on 8th June 2021.

The event was set to celebrate the top 10 women shaping banking and finance across East Africa. The 2021 Angaza Awards, which will be a Pan-African Awards program, was also announced at the event.

Key speakers at this webinar were Dr Nancy Onyango, Director of Internal Audit and Inspection at the IMF; and Gail Evans, New York Times Best Selling Author of Play Like a Man, Win Like a Woman and former White House Aide and CNN Executive Vice President.

Dr Nancy Onyango advised women to deep expertise in their fields, spend time in forums and link with key players in that sector.
“Gain exposure with other cultures by seeking for employment overseas and use customized CV for each job application,” said Dr Onyango.

According to Gail Evans, women should show up and be fully present in meetings and not be preoccupied with other issues.
“Be simple and avoid jargon. Multi-tasking only means that you are mediocre Smart people ask good questions in a business meeting. Most women face drawbacks due to perfectionism, procrastination and fear of failure, said Evans.

She advised women to play like a man and win like a woman, be strategic, and intentionally make their moves to get to the top.

“For us to pull up businesses that have been affected by effects of COVID-19 pandemic, we need to re-invent business models, change the product offering and make more use of digital platforms,” said Mary Wamae Equity Group Executive Director.

Mary Wamae emerged top at the inaugural Angaza awards( East Africa) ahead of other finalists.

While women continue to excel in banking and finance, the number of that occupies top executive positions is still less.

“There is a gap for women occupying C suite level and it continues to widen in the finance sector. At entry level, there is still an experience gap for women,” said Nkirote Mworia, Group Secretary for UAP-Old Mutual Group.

She said that at the Middle Management level, women do not express their ambition. For this reason, UAP-Old Mutual has developed an executive sponsorship program to help women get to the next level.

Mworia added that most women hold the notion that top positions in management have politics and pressure.
“One needs leadership skills and not technical expertise to get to the top,” said Mworia.

According to Catherine Karimi, Chief Executive Officer and Principal Officer of APA Life Assurance Company, women need to focus on the strengths and natural abilities that they already have.


“Take risks and raise your hand to get to the high table. Find mentors along the way and develop your own brand and not compare yourself with others Focus on your strengths because it will make you move faster in the career ladder,” said Karimi.

Lina Mukashyaka Higiro, a Rwandan businesswoman and chief executive officer of the NCBA Bank Rwanda since July 2018, has three lessons for women who want to excel in banking and finance.
“Always spend at least 20 minutes each day reading, seeking genuine feedback from other staff members and widen your network,” Higiro told the webinar.

Women picked for Angaza awards

Mary Wamae, Executive Director, led this year’s Top 10 Women in Angaza Awards, Equity Group (Kenya)(2)Catherine Karimi, Chief Executive Officer, APA Life Insurance Company (Kenya)(3)Lina Higiro, Chief Executive Officer, NCBA Bank (Rwanda)(4)Elizabeth Wasunna Ochwa, Business Banking Director, Absa Bank (Kenya)(5)Joanita Jaggwe, Country Head of Risk and Compliance, KCB Group (South Sudan)(6) Millicent Omukaga, Technical Assistance Expert on Inclusive Finance, African Development Bank (Kenya)(7)Emmanuella Nzahabonimana, Head of Information Technology, KCB Group (Rwanda)(8)Judith Sidi Odhiambo, Group Head of Corporate Affairs, KCB Group (Kenya)(9)Rosemary Ngure, ESG & Impact Manager, Catalyst Principal Partners (Kenya) and(10)Pooja Bhatt, Co-Founder, QuantaRisk and QuantaInsure (Kenya).

The Kenyan Wallstreet, a financial media firm, partnered with Kaleidoscope Consultants to raise awareness of seasoned women shaping and influencing the sector through their organizations.

The Angaza Award criteria included assessing the applicants’ area of responsibility and contribution to firm performance. Professionals in Banking, Capital Markets, Insurance, Investment Banking, Fintech, Fund Management, Microfinance, and SACCOs were invited to submit their applications or nominations via the Kenyan Wallstreet Award Web page.

ALSO READ: Angaza Awards Top Finalist; Mary Wangari Wamae

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IFC in New Partnership to Develop Affordable Housing in Mombasa County




NAIROBI, Kenya, Jun 14 – International Finance Corporation, a member of the World Bank Group, has signed a new deal in support of affordable housing in Kenya.

The corporation has partnered with Belco Realty LLP, to develop a mixed use affordable living complex that will consist of 1,379 residential units and over 4,500 square meters of retail and commercial spaces in Kongowea, Mombasa County.

Together with the Kenyan firm, IFC says the partnership will help meet surging demand for housing in Kenya.

Under the agreement, IFC will help identify suitable international strategic partners to invest equity of up to $12 million, or Sh1.3 billion in Belco and to provide the company with the necessary technical support to develop the project.

The development, known as Kongowea Village, will be developed to foster inclusive and affordable community living within the city.

Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa says the project, which will be located on eight acres within the heart of Mombasa city, will aim to be a catalyst for wider city regeneration.

The project will be developed to meet IFC EDGE certification requirements and will incorporate the latest technologies in passive cooling, energy efficiency and water conservation to support sustainable urbanization.

 Kongowea Village is expected to create 1,160 jobs and business opportunities during the three-year construction period and many more after completion of the project within the themed retail arcade.


 “Access to quality housing is a growing problem in Kenya and across Africa,” said Jumoke Jagun-Dokunmu, IFC’s Regional Director for Eastern Africa.

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“Developers often target the high end of the market, but this project is aimed squarely at the lower-income bracket. Helping Belco identify the right partners for this project is expected to attract more developers to Kenya and other parts of Africa to help meet rising demand for housing.”

 IFC‘s engagement with Belco will help Kenya support its rapidly growing and urbanizing population by increasing access to affordable housing. The problem is similar across most of Africa, where population growth and demand for quality housing are combining to outstrip supply.  We are pleased to partner with a company such as Belco that is committed to contributing to solving this challenge,” said Emmanuel Nyirinkindi, IFC‘s Director for Transaction Advisory Services.

 IFC’s partnership with Belco is part of its broader strategy to support better access to affordable housing in Kenya.

In 2020, IFC invested $2 million in equity in the Kenya Mortgage Refinance Company (KMRC) to help increase access to affordable mortgages and support home ownership in the country.

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Kenyan Tribune