Safaricom, Airtel buy out Essar's Kenyan telecom business for $120 mn

New Delhi: Essar on Saturday said it has sold its telecom business in Kenya to Safaricom and Airtel for around $120 million.

The deal marks the exit of Essar from telecom business having started the process in 2010 with the sale of its telecom tower business to ATC, which was followed by the sale of its 33 per cent stake in Vodafone Essar for $5.2 billion in 2011.

In July it sold its US-based outsourcing company, Aegis US, to Teleperformance for $610 million.

[caption id=“attachment_88638” align=“alignleft” width=“380”]  Representational image. Reuters[/caption]

Essar Capital, the fund manager of Essar Global Fund Ltd (EGFL), which through its portfolio company Essar Telecom Kenya Limited, operates the yuMobile telecom service in Kenya, announced the signing of binding agreements with Safaricom and Airtel for sale of its telecom business in Kenya for approximately $120 million.

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The divestment will see Safaricom take over Essar Telecom’s network, IT and office infrastructure while Airtel will acquire the company’s subscribers.

“Airtel Networks Kenya (Airtel Kenya), a wholly owned subsidiary of Bharti Airtel International Netherlands BV has signed a definitive agreement with Essar Telecommunications Kenya Limited, which operates under the brand name ‘yuMobile’, to acquire its over 2.7 million subscribers,” Bharti Airtel said in a statement.

Essar Capital said the transaction has received approval from the Communication Authority (CA) in Kenya and it will now be filed with the Competition Authority of Kenya (CAK) for approval. The company expects the transaction to conclude during the fourth quarter of 2014.

“We have structured the transaction such that our customers will not need to change their mobile numbers or sim cards, post this transaction,” yuMobile’s Chief Executive Officer Madhur Taneja said.

Taneja added that close to 90 per cent of the yuMobile’s employees will be absorbed by Safaricom and Airtel.

“We also believe that the transaction with Safaricom and Airtel will provide for much needed consolidation in the Kenyan mobile telecommunications market and provide customers with fewer mobile operators, better equipped to enhance service delivery and provide customers with greater product offerings,” Essar Capital Board Member Firdhose Coovadia said.

PTI