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Kenya: Press Releases: TEAMS Issues Clarification on Shareholding, Timelines and Pricing |
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Friday, 11 September 2009 |
Nairobi, 10 September 2009 --- The East African Marine Systems (TEAMS) Limited has refuted claims of impropriety in the sale and allocation of shares as recently reported in a section of the Kenyan media.
Board Chairman Michael Joseph termed the recent media reports as premature and presumptive stating that the overall shareholding structure was still intact and reflected the objectives of the Kenyan government.
“Our specific attention is drawn to references by certain media houses that there has been some form of impropriety in the sale and allocation of shares in TEAMS Limited in contravention of the stated objectives of the Government of Kenya (GoK), and in a manner that may injure the interests of citizens, on whose behalf this investment was made,” read a statement from the chairman.
The statement explained that the TEAMS cable from the start had a two tier structure that provides for the joint ownership of the cable between the government of Kenya and Etisalat of UAE. “This structure is similar to the ownership structures used by other consortia to construct and manage sub-marine cable systems the world over,” said Joseph.
The statement gave a background of the cable stating that during the initial stages of the project the Government of Kenya, through the Ministry of Information and Communication, entered into an agreement with Etisalat of the UAE to design and construct a submarine fiber cable from Fujairah to Mombasa.
Under this shareholding arrangement, the ownership of The East African Marine System (TEAMS) was agreed to be 85% GoK and 15% Etisalat. This first tier involves a relationship between Etisalat of the UAE and The East African Marine System Limited (TEAMS) of Kenya who together jointly own the cable through a construction and maintenance agreement that sets out an ownership ratio for Etisalat and TEAMS at 15% and 85% respectively.
The project commenced in 2007 and was initially funded by the GoK and Etisalat according to their percentage ownership.
The second tier of ownership resulted when the government through a formal privatization process sold part of its stake to local and regional investors, retaining only 20% in the process.
“As a principal of the TEAMS project, the ownership of shareholding in TEAMS Limited is directly proportionate to the equivalent ownership of TEAMS’ share of capacity on the cable system,” said Joseph.
“The result of the two tier ownership is that because TEAMS Limited owns 85% of the cable system, it follows that the shareholders of TEAMS Limited are entitled to their proportionate ownership of the 85% of the total capacity of the cable system, thus a shareholder such as Safaricom Limited that owns 22.5% of the shareholding in TEAMS Limited will own approximately 19.1% of the available capacity on the cable system,” he explained.
After the government privatization process, the shareholding indicated that the Government of Kenya had a 20% stake, Safaricom Limited 22.5% and Telkom Kenya Limited 22.5%.
Others include Essar Telecom Kenya Ltd 10%, Kenya Data Networks Ltd 10%, Wananchi Telecoms 5%, Access Kenya 1.25% and Jamii Telecommunications 1.25%. The unallocated shares stood at 7.5%.
The statement equally dismissed claims that the TEAMS bandwidth capacity will be expensive as stated in a section of the press.
Joseph said TEAMS itself will not be involved in selling capacity, but this will be done by the various shareholders as licensed telecommunications operators.
“TEAMS capacity will be sold by its shareholders in their capacity as licensed telecommunications operators. It is common knowledge that the various shareholders in TEAMs are competitors in the market place and therefore this level of competitiveness between each of the shareholders will ensure that the price of capacity at both the retail and wholesale levels will be very competitive and certainly more affordable than that currently being sold by competing cable systems,” he said.
On the ongoing legal claim by Iquip Limited, he said the matter was subject of a judicial process and therefore not to be discussed prematurely. “As this matter is now before the High Court of Kenya, we are not in a position to comment on the merits of their claim (or lack thereof),” he said. However, he added that deliberations are going on between the various stakeholders in TEAMS and efforts are underway to explore the most expedient proposals to resolve the dispute amicably and in the interests of the overall TEAMs project.
Joseph said the final shareholding in TEAMS Limited may therefore change to reflect the possible resolution of this dispute.
According to the statement, following the completion of the laying of shore end cable and the opening of the TEAMS landing station in Mombasa the cable system has been undergoing rigorous testing in accordance with the terms of the construction agreement signed with the contractors M/s Alcatel Lucent Submarine Networks Systems Ltd. It is expected the testing will be completed by the week of mid this month and various shareholders who have already connected to the cable system will be able to activate their usage of the capacity.
Joseph said that with regard to onward connectivity from Fujairah in the UAE to the rest of the world, all the shareholders in TEAMs have entered into multilateral or unilateral onward connectivity agreements with several of the international carriers present in Fujairah to terminate their voice and IP traffic in different global destinations such as London, Hongkong, Italy and Singapore.
He said as soon as the cable is handed over to TEAMS by the contractors, this connectivity will be activated and it will then be up to each investor to decide the pricing and timing of the launch of their individual bandwidth on the cable.
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