The COMESA Competition Commission (CCC) has issued a notice of inquiry into the proposed acquisition of a 35 per cent stake of Microsoft-backed Kenyan internet service provider (ISP), Mawingu Networks, by a South African Fund.
Mawingu Networks is the sixth largest ISP in Kenya in terms of market share as it controls 2.8% market share, falling behind market leaders Safaricom (36.1%), Jamii (24%), Wananchi Group (15.4%), Poa Internet (14%), and Vilcom Network (3.2%) according to the Second Quarter Statistics for the Financial Year 2024/25 by the Communications Authority of Kenya (CA).
CCC in a notice confirmed that the Kenyan internet firm is selling a 35 per cent stake to South Africa’s Pembani Remgro Infrastructure Fund II through a yet to be incorporated Special Purpose Vehicle (SPV) for an undisclosed amount.
This comes months after the Nairobi-based firm raised Ksh1.9 billion in debt financing from a pool of investors.
Proposed sale of 35% stake of Mawingu Networks
According to the COMESA commission, the South African fund will get “controlling interest” in the Kenyan internet seller.
“The parties submitted that the SPV will be incorporated specifically for purposes of subscribing for shares in Mawingu. The SPV will be directly wholly owned and controlled by PRIF II,” read part of the notice.
“PRIF II is a recently established En Commandite Partnership¹ domiciled in South Africa that operates as a close-ended fund.”
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PRIF II is mandated to invest in equity, quasi-equity and equity-related investments in infrastructure (and related industry) companies and projects headquartered in, or whose business or operations are located or conducted primarily within Africa.
Within the Common Market, the acquiring group operates in Comoros, the Democratic Republic of Congo, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Uganda, Zambia and Zimbabwe.
The parties submitted that Mawingu is a company incorporated in Mauritius and operates under a global business license, providing internet connectivity services such as fixed wireless access and fibre to peri-urban and rural areas in Kenya.
The proposed transaction, according to the parties, will not raise any horizontal concerns as there are no overlaps between the activities of the acquiring group and the target group within the Common Market.
More about the notice
They also submitted that there is a limited vertical relationship between the merging parties, as the target group both directly and indirectly procures data centre services from a data centre owned by the acquiring group in Kenya.
“Specifically, the target group directly acquires cross-connects for links (i.e. interconnection services) from this data centre and sub-leases space within the same facility from a third party (i.e. colocation services),” CCC added.
“These transactions are not significant and will not result in input or customer foreclosure concerns, nor will they affect the competitive landscape in Kenya.”
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The Commission is set to determine, among other things, whether the proposed transaction is likely to substantially prevent or lessen competition in the Common Market and whether the proposed transaction is or would be contrary to the public interest as provided for under Article 26 of the Regulations.
CCC in turn gave notice to all interested stakeholders, including competitors, suppliers and customers of the parties to the proposed transaction to submit written representations to the Commission with regard to the proposed inquiry.
Mawingu acquires Tanzanian ISP
The development comes months after Mawingu in November 2024 announced the acquisition of Habari, an Arusha-based ISP with operations across 7 regions in Tanzania.
Habari has for more than 25 years of experience delivered Internet and ICT solutions to rural households and businesses across Tanzania.
Mawingu raised Ksh1.9 billion ($15 million) of debt and equity financing to enable the acquisition.
The Africa Go Green Fund (“AGG”), managed by Cygnum Capital, provided Ks1.4 billion ($11 million) of long-term senior debt.
An additional Ksh500 million ($4 million) investment was provided InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), and from Dutch Entrepreneurial Development Bank FMO.
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