Econet fails to block Kenyan licence

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Kenya has developed to become one of Africa’s most advanced mobile markets as a result of the efforts of incumbents Safaricom and Celtel. The entry of a third GSM operator remains uncertain.

A Kenyan court has blocked an attempt by Econet Wireless to prevent the Kenyan government issuing a unified telecommunication licence.

Dubai based VTEL was awarded a unified national licence by the Communications Commission of Kenya in October 2006, after it successfully bid US$170 million to operate mobile, fixed-line and internet services.

Econet Wireless International requested the court invalidate the licence tender because the regulator had acted unfairly, accusing officials of blocking Econet from entering the market by refusing to hand over transmission frequencies and network codes.

The South African based operator, which currently works in Lesotho, Nigeria and Zimbabwe, was the main shareholder in a consortium awarded Kenya's third GSM licence, but has since become embroiled in a legal battle against two former shareholders, which issued an injunction against Econet and the Communications Commission of Kenya over the way the licence was originally issued.

In 2005 the court found in Econet's favour and decreed that the plaintiff had deliberately concealed correspondence concerning its failure to raise funds to finance the purchase of its allocation of consortium shares. However, Econet Wireless Kenya has yet to commercially launch its mobile network.

Justice Alnashir Visram, who presided over the latest ruling, stated that if Econet's attempt to block the endowment of the unified national licence to VTEL succeeded it would have been to the detriment of Kenyans and the Kenyan economy.

"It is against the interest of Kenyans to block the Communications Commission of Kenya from issuing a licence to the VTEL consortium. Courts should not be used to scare away investors," concluded Visram.

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