Business Daily (Nairobi)
Okuttah Mark
30 June 2009
Investors who had applied for shares in the East Africa Marine system (TEAMs) undersea fibre optic cable project have up to today(Tuesday) to pay for the stakes or forfeit them.
The $110 million (Sh8.6 billion) project is expected to connect East Africa to rest of the world through a fibre optic cable link between Mombasa and Fujairah in the United Arab Emirates.
The payment for the shares, which is equivalent to the stakes allocated, is aimed at completing the privatisation of the project with formal transfer of the shares to the investors after their allocation in February.
Prior to the allocation, the government held the 85 per cent shares reserved for it and local investors, but still has in its custody the unpaid for shares.
The deadline comes amid talk that the much publicised landing of the cable in Mombasa three weeks ago did not happen, claims which have been dismissed by the government on the strength that what remains is testing of the project that requires between 30 and 45 days.
TEAMs chairman, Mr Michael Joseph, noted that firms allocated stakes in the project must pay for their shares by today but declined to name firms that have so far not paid up.
"The final completion date is June 30 when all shareholders must commit and then the privatisation will be complete" said Mr Joseph who is also the chief executive of Safaricom, a shareholder in Teams. "I can give out other information after this date."
The government of Kenya, Safaricom and Telkom Kenya have each a 20 per cent stake in Teams while Econet Wireless, Kenya Data Network and Wananchi Online each own 10 per cent.
Others include Jamii Telkom , AccessKenya, Inhand Ltd Equip Ltd , Flashcom and Fibrnet Africa of Uganda, whose holdings are below 3.5 per cent.
The loss of shareholding by any of these firms will deal a blow to their ambition to access the high speed data free of charge for period of 20 years, a move that will blunt their competitive edge in what is billed to became the biggest revenue earner for local telecom firms.
The undersea cable will provide the country with faster internet connectivity and is expected to grow the number of internet users to 10 million from the current three million, offering opportunities for telecom operators, especially the mobile telephony firms, to boost flagging revenues in the voice market.
Still, it would offer a number of local telecom firms an opportunity to own a piece in the under sea fibre cable project.
The payment of the shares will allow the board members to agree on the structure of Teams Limited including the faster recruitment of the firms executives, which was advertised two months, as well as agree on the pricing of the cable to the consumers.
Pricing is crucial for closing high speed internet or broadband purchase deals as other cable providers such as Seacom (Sea Cable System) have already unveiled their pricing ahead of them going live.
It announced in March that it offer a megabyte of data to bulk buyers at $200 (Sh15, 200) per month.Seacom, whose cable was expected to go live this past Saturday, has had to postpone its cable installation twice on increased piracy activity along the coast off Somalia.
The company said increased piracy activities in the month of April and May delayed its works.
The other under sea cable providers angling to connect East Africa to the rest of the world is Eassy cable, which is expected to go live next year.
East Africa is among the few regions in the world that has no access to international cables and has embarked on an aggressive search for low cost, high quality, international bandwidth.
The region remains locked in expensive satellite bandwidth whose cost currently ranges from $5,000 to $6,000 per megabyte per month.
It is estimated that similar bandwidth will cost between $200 and $300 on fibre optic cable.
The cables are expected to reduce the cost of communication in Kenya, improve quality as well as stimulate the demand of online businesses in the region-especially the Business Process Outsourcing BPO whose aim includes creating wealth and job opportunities in the country.
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