Essar Global Fund exits investment in Kenya
Nairobi: Essar Capital, the fund manager of Essar Global Fund Limited (“EGFL”), which through its portfolio company Essar Telecom Kenya Limited (ETKL), operates the popular yuMobile telecom service in Kenya, today announced the signing of binding agreements with Safaricom and Airtel for sale of its telecom business in Kenya for approximately US$ 120 million. The divestment will see Safaricom take over ETKL’s Network, IT & Office infrastructure while Airtel will acquire the company’s subscribers.
The transaction has received approval from the Communication Authority (CA) in Kenya, subject to all parties involved in the transaction meeting certain pre-conditions. The transaction will now be filed with the Competition Authority of Kenya (CAK) for approval. Essar Capital expects the transaction to conclude during the fourth quarter of 2014. yuMobile will continue to operate and serve customers offering uninterrupted services.
yuMobile’s Chief Executive Officer, Madhur Taneja said: “We would like to reassure our customers that they will continue enjoying our products and services uninterrupted. We have structured the transaction such that our customers will not need to change their mobile numbers or sim cards, post this transaction. Moreover, we expect that the intended transaction will bring bigger benefits through an expanded product bouquet to the customers.” Mr. Taneja further expressed his delight that as a part of the transaction, close to 90% of the yuMobile’s employees will be absorbed by Safaricom and Airtel. EGFL, together with its partners, invested in ETKL in 2007-2008. The investment led to an upgrade in infrastructure, improved customer service offerings and brought new and innovative marketing strategies to the Kenyan mobile telecommunications market.
Commenting on the exit, Firdhose Coovadia, Board Member of Essar Capital, said: “The ETKL transaction is another step towards achieving Essar Capital’s strategy of divesting EGFL’s investments in the global telecommunications sector. 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.” The divestment of ETKL represents EGFL’s second significant portfolio exit in the last few months, following the sale in July of its US-based outsourcing company, Aegis US, to Teleperformance for US$ 610 million.
The Prime Minister Mr. Narendrabhai Modi today said that with ‘High Speed Project’ (HSP) a …