The Essar group has signed an agreement for the sale of its telecom business in Kenya. The signing came after CA (Communication Authority of Kenya) approved Essar’s YuMobile to be sold for $120million to Bharti Airtel Kenya and Kenya’s Safaricom Ltd.
According to Firdhose Coovadia, board member of Essar Capital, the transaction is an additional step towards attaining Essar Capital’s strategy of depriving Essar Global Fund investments within the global telecommunications sector.
Coovadia further noted: “We also think that the transaction with Airtel and Safaricom will offer much needed consolidation within the Kenyan mobile telecommunications market and offer clients with fewer mobile operators, equipped better to enhance service delivery and offer customers great products.”
Before the CA approved the transaction, the two parties involved had to meet some pre-conditions, which include Safaricom to open up its M-pesa network to rival operators. Additionally, both Airtel and Safaricom would have to pay $5.5 million each to allow synchronization of the assets to be taken by the two operators. On the other hand, YuMobile was expected to clear all its outstanding regulatory fees before approvals.
Finalizing the agreement will see Bharti Airtel acquire YuMobile’s subscriber base while Safaricom will take over Essar Telecom Kenya’s network, office and IT infrastructure.
Madhur Taneja, the CEO of YuMobile stated: “We have structured the transaction in such a manner that our clients will not be required to change their SIM cards or mobile numbers. Furthermore, we anticipate that the planned transaction will bring larger benefits through an increased product bouquet to the customers.”
The exit of Essar group from the telecom business began back in 2010. The CA will soon file for approval the multi-million dollar transaction and the process is expected to complete towards the end of the year.