NAIROBI, Kenya- Wananchi Group, the parent company of Zuku, is on the verge of a major ownership shake-up as it plans to sell a controlling stake to Axian Telecom Fibre of Mauritius.
According to regulatory filings submitted to the Comesa Competition Commission, Axian is set to acquire a whopping 99.63pc of Wananchi, marking a significant change in the ownership of one of Kenya’s early internet service pioneers.
Axian Telecom Fibre, a subsidiary of Axian Telecom Ltd, is owned by Madagascar-based entrepreneur Hassanein Hiridjee.
The firm is no stranger to the regional market, boasting ownership of telecommunications companies such as Tigo and Zantel in Tanzania.
The planned acquisition also covers other Comesa markets, where Axian has operations in Uganda, DR Congo, and its home base of Mauritius. Though it has an administrative office in Kenya, Axian’s operations in the country have not yet generated significant revenue.
The Comesa Competition Commission revealed that the deal involves Wananchi divesting its majority stake in iSat Africa Ltd, a satellite communications company with subsidiaries in Kenya and Zambia.
This carve-out ensures iSat is not included in the transaction, focusing the acquisition solely on Wananchi’s internet services.
Zuku, founded by the late Njeri Rionge and former ICT Cabinet Secretary Joe Mucheru, dominated the internet space in the early 2000s.
Launched in 1998, the company pioneered internet service provision in Kenya and held the top spot for over a decade. However, years of internal shareholder wrangling and customer dissatisfaction have taken their toll on the company’s market position.
In the late 2010s, Wananchi found itself embroiled in several controversies. A notable case in 2018 saw local shareholders claim they had been defrauded out of KSh 20 billion by rival investors, creating instability at the company’s leadership level.
The same year, Wananchi faced a KSh 3.4 billion tax dispute with the Kenya Revenue Authority (KRA), further denting its reputation. On top of these challenges, customer complaints about frequent internet outages have been filed with the Communications Authority of Kenya, adding to the firm’s woes.
Fierce competition from players like Safaricom and Jamii Telecom has seen Zuku’s market share in fixed wireless internet plummet.
Data from the Communications Authority (CA) shows that Zuku’s dominance has shrunk from 49pc a decade ago to just 18.8pc by March 2023. In contrast, Safaricom has surged ahead with a 37.4pc market share, leaving Zuku trailing with its 262,753 subscribers.
While the deal with Axian offers a fresh chapter for Wananchi Group, the road ahead remains challenging.
The company’s long-standing struggles with internal shareholder disputes, customer dissatisfaction, and intense competition have diminished its market dominance.
