A controversial British firm and a company owned by a member of parliament are the latest entrants into the local telecommunications market after they were granted licences by the Communications Authority of Kenya (CA) to operate mobile virtual networks.
Lycamobile Kenya is owned by a UK firm of a similar name that has a presence in 21 countries, targeting mainly diaspora communities that want to make cheap international calls.
Homeland Media Group, the second firm, is owned by Mwingi Central MP, Mr Joe Mutambu, and his wife.
Lycamobile UK was founded by British-Sri Lankan tycoon, Subaskaran Allirajah. CA records show that the company has had a licence to operate in Kenya since November 2015, but is yet to launch operations.
Mr Mutambu’s company was licensed in February last year.
“We see the mobile virtual network operator (MVNOs) as providing competition in the market. They come in and offer a bigger variety of services and prices,” said CA director- general Francis Wangusi.
With the MVNO permits, these companies can provide voice, data and mobile money services to Kenyans.
They, however, do not have their own infrastructure and have to “piggyback” on Mobile Network Operators (MNOs)—Safaricom, Airtel and Telkom Kenya.
Lycamobile UK has been at the centre of controversies surrounding its bookkeeping. The UK government records show that Lycamobile’s auditors, KPMG, in 2015 offered a qualified opinion of the company’s accounts after they were so baffled by Lycamobile UK’s complex structure as to be “unable to obtain sufficient appropriate evidence” regarding Sh17 billion (£134 million) owed to the company by “related parties”.
Records also show that Lycamobile UK has in the past failed to meet deadlines in filing its accounts and in 2016 came close to being struck off the register of companies.
The operator has refuted allegations of financial misconduct. The company said it abides by the law in all the jurisdictions it operates and that the concerns about its UK business would not affect any operations in Kenya.
The CA has said that it considers the local subsidiary a different legal entity from its Lycamobile UK. However, the Authority said that the local company would be required to comply with Kenyan law if it hopes to keep its licence.
“Launching an MVNO in a new territory is a long and complicated process, with a number of factors involved. Whilst we have made great strides already, there are still a few stages left to finalise before we can announce the launch of our services in Kenya,” said Lycamobile in a statement.
This would be the British firm’s first foray into Sub-Saharan Africa as it has concentrated most of its activity on Western Europe. The company said that it will offer low-cost national and international calls, texts and data.
The CA noted that new telecom firms may face hurdles such as negotiating commercial contracts that would allow their subscribers to call users on other networks, leading to delays in launching operations.
“There have been some challenges. There have been delays in getting interconnection with other MNOs,” said Mr Mutambu in a telephone interview with the Business Daily.
The MP projected that operations would take off within the next four months.
Homeland will offer Kenyans Voice over Internet Protocol (VoIP) services at a monthly subscription rate of between Sh1,000 and 2,000.
Homeland is using Airtel’s infrastructure to roll out its services.
Mr Mutambu also has interests in broadcasting, owning the vernacular television channel, Kyeni.
The issuance of licences to Lycamobile and Homeland Group brought to five the number of MVNOs operating in the Kenyan market.