Some minority shareholders in Teams yet to pay up

Published on 09/06/2009

By Standard Team

Other than the environmental licensing headache, Teams also faces housekeeping issues related to its shareholding.

A move by the Government to kick-out investors who have not paid for their stake, and invite new ones, some from South Africa, was not received well in some quarters.

According to industry players, the Teams project should be purely an East African affair, more so considering how South Africans took control of another undersea cable project, known as Eassy (East Africa Submarine System)

Internet Service Providers UUNET and Iconet (Internet Solutions) and the Rwanda Government are among the other new investors being considered for allocations.

“We will consider all of them,” said Information and Communication PS, Bitange Ndemo, adding that the true value of the project is $90 million (Sh7 billion) — or $95 million(Sh7.5 billion) less the initial estimates of $110 million (Sh8.7 billion).

commitment fee

Ndemo, however, could not explain whether the defaulters’ five per cent commitment fee would be reimbursed, and a competitive bidding process followed to identifying new shareholders. The latter would further delay the project. While Treasury has paid $20 million (Sh1.5 billion) for its 20 per cent stake, only Sh1.3 billion has so far been received from other shareholders, bringing the total sum to Sh2.8 billion.

Apart from the minority shareholders, other investors include Safaricom Ltd and Telkom Kenya with 20 per cent each, Econet Wireless Kenya and Kenya Data Networks, partnering with Zain with a 10 per cent stake each.

Teams is a Government-initiated special purpose vehicle created to develop a fibre-optic sea cable connecting the East African region through Mombasa, to the world’s fibre-optic communications backbone via Fujaira.

It was initiated after ownership tussles rocked the East Africa Submarine Systems (Eassy) and is expected to attract up to $10 billion (Sh790 billion) worth of investments in special economic zones in the next three years.

In March private investors signed their cable ownership agreements and committed themselves to settle their dues within three months.

The laying of the cable had been scheduled to start on March 24 and be completed by end of this month (June 30).

Despite the hiccups, the Government remains optimistic the project will remain on course.

“We are ahead of schedule with no cost overrun,” Ndemo said.

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