What you need to know:
- Competition heating up with expected entry of KQ, Tangaza Pesa, Zioncell and Finserve
- The Sh10.5 billion transaction was concluded on Saturday.
Kenya’s Big Three mobile operators finally put pen to paper on a deal that will see yuMobile exit the scene, selling its assets to Safaricom and Airtel.
The Sh10.5 billion transaction was concluded on Saturday.
“Essar… today announced the signing of binding agreements with Safaricom and Airtel for sale of its telecom business in Kenya for approximately $120 million (Sh10.5 billion),” a statement by Essar Telecommunications Kenya Ltd said.
In the deal expected to be concluded in the last quarter of this year, Safaricom will take over yuMobile’s network, IT and office infrastructure while Airtel will acquire the company’s subscribers.
“The transaction has received approval from the Communication Authority (CA), subject to all parties involved in the deal meeting certain pre-conditions.
The transaction will now be filed with the Competition Authority of Kenya (CAK) for approval,” the statement further read.
Close to 90 per cent of yuMobile’s employees will be absorbed by Safaricom and Airtel.
yuMobile made an entry in Kenya in 2007-2008, after an investment by Essar of India and local partners.
Commenting on the exit, Firdhose Coovadia, board member of Essar Capital, said: “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 greater product offerings.”
The divestment of yuMobile represents Essar’s second significant portfolio exit in the past few months, following the sale in July of its US-based outsourcing company, Aegis US, to Teleperformance, for $610 million (about Sh52 billion).
The sale of yuMobile is expected to change the dynamics of the telecommunication industry, putting Orange under increased pressure as the top two tighten their grip on the market.
Successfully migrated, Airtel will see its market control hit 25 per cent, while Safaricom will benefit from additional infrastructure, which it needs to improve its quality of service.
The news also comes at a time when competition is heating up in the industry, with the expected entry of several companies in mobile phone business.
Kenya Airways, Tangaza Pesa, Zioncell and Equity Bank’s Finserve Africa Ltd are expected to roll out mobile phone services soon, targeting specific groups.