Safaricom and Airtel buy out Essar’s Yu for $120M

Indian operator Essar has agreed to sell Kenyan number three yuMobile to local rivals Airtel and Safaricom for KSH10.5 billion ($120 million).

The deal, which has the approval of the Kenyan Communication Authority, will see Safaricom assume yuMobile’s infrastructure while Airtel takers over its subscribers and GSM licences. It will likely close by the end of the year as long as CA’s preconditions are met.

To meet the criteria, Safaricom and Airtel will each have to shell out $5.4 million to cover yuMobile’s unpaid licence fees. In addition, around 90% of yuMobile’s workforce will be assimilated into the two buyers.

Safaricom must also comply with another strict order and open up its massively popular M-Pesa finance network to rival companies. While this condition was initially refused by CEO Bob Collymore, the Kenyan operator has given in to pressure from the regulator. Users of mobile money services provided by major operators such as Orange and Airtel, as well as smaller MVNOs, will be able to use M-Pesa agents for transactions.

Firdhose Coovadia, board member of Essar Capital (EGFL’s fund manager), said: “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.”

Safaricom leads the Kenyan market with 21.6 million connections. Airtel comes second with 5.3 million, while Yu had 2.6 million at the end of Q1 2014.

 

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