Safaricom, Airtel close in on Essar Kenya takeover

Safaricom, Airtel close in on Essar Kenya takeover

09 OCT 2014

The joint bid by Airtel and Safaricom for Essar Kenya has been given preliminary approval by the East African country’s regulator, with a final thumbs-up likely in November, according to Reuters.

The $100 million bid to acquire the assets of Essar’s yuMobile, which is Kenya’s smallest operator, was lodged in February.

A representative of the Communications Authority of Kenya (CAK) said in a news conference that the process “is at an advanced stage”.

The CAK and competition authority have approved the deal but are now leaving sufficient time for other parties to raise objections — a legal requirement for final approval to be granted.

If the deal is approved, Safaricom will acquire Yu’s infrastructure and spectrum, while Airtel will gain the smaller company’s connections and GSM licences.

The additional spectrum that Safaricom is looking to secure will be used to improve network quality, such as the frequency of dropped calls.

The additional connections will boost Airtel’s current 5.5 million total, which is significantly behind Safaricom, which had 22.3 million connections at the end of the third quarter according to GSMA Intelligence figures. Third-placed Telkom Kenya, which is majority owned by Orange, claims 2.8 million.

Indian player Essar aims to leave the Kenyan market it entered in 2008 after failing to make a sufficient return on its investment.

The deal is another step in the company’s strategy to divest its global telecommunications portfolio. Essar Global Fund Limited (EGFL), which includes yuMobile as part of its portfolio, sold its US-based outsourcing company Aegis to Teleperformance for $610 million in July.

One of the deal’s pre-conditions, according to previous local media reports, is the payment of yuMobile’s outstanding licence fees. That means both Safaricom and Airtel having to stump up $5.4 million.

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Tim Ferguson

Tim joined Mobile World Live in August 2011 and works across all channels, with a particular focus on apps. He came to the GSMA with five years of tech journalism experience, having started his career as a reporter... More

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