BrandArena: How Airtel Kenya settled license dispute out of court, agreed to pay the sum of $17.5 million

Friday 18 February 2022

How Airtel Kenya settled license dispute out of court, agreed to pay the sum of $17.5 million

For the past seven years, Airtel Kenya has been in a license dispute with Kenya's Communications Authority. Outside of the court action, both sides have decided to end the litigation. As a result of the agreement reached last week, Airtel Kenya has agreed to pay Sh2 billion ($17.5 million) to the telecom regulator for the renewal of its licenses.

There would be no lump sum payment and the amount would be spread out over the next two years. According to a Business Daily article, Airtel Kenya's license has been terminated since 2015.

Ezra Chiloba, the Director-General of the Communications Authority of Kenya, said the dispute between its organisation and Airtel has been on for a long time over the Essar deal. The disagreement has been on it for the past seven years, “But I am glad to report that we struck a deal and this is a major achievement for us.”

“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 paid Sh752 ($6.976 million) in 2014 to buy yuMobile from Essar Telecom Kenya, which was owned by Essar. According to the company, Kenya’s Communications Authority had consented to consolidate yuMobile’s operating license with its own at the time of acquisition. But when the deal was done, the telecom regulator said that Airtel had to pay Sh2 billion ($17.5 million) to keep its license.

yuMobile’s Kenyan license was not immediately transferred to Airtel, according to the country’s telecom regulator. As a result, the telecommunications company is required to pay to renew its operating license.

Airtel Kenya is expected to pay the first installment this week, making it possible for the telecom operator to seek an exemption from a rule that requires local shareholders to own at least a 30 percent stake in telecom companies by March 2024.

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