Airtel Kenya required to find local investor by April 2013

Bharti Airtel has until April 2013 to find a Kenyan entity to acquire a 15 per cent stake in Airtel Kenya to remain compliant with local regulations on foreign ownership.

The government has a rule that locals must own at least 20 per cent of any telecom network operator. Although Airtel owns 80 per cent of the company, the other local shareholder, Naushad Merali, was given permission to sell 15 per cent to foreign shareholders.

He retains a five per cent stake, leaving 95 per cent of Airtel Kenya owned by foreigners.

As a consequence, Airtel was given a three-year grace period to find another local shareholder to sell a 15 per cent stake to. That deadline expires in April 2013, and the company has been told that the deadline will not be extended.

The 15 per cent stake is estimated to be worth Sh5.3 billion (US$61 million), and Bharti Airtel is seeking some leniency due to the difficulty in finding a local investor able to buy the stake, given the mobile network is not yet turning a profit.