Vodafone's Safaricom snaps up Essar's network assets in Kenya

Safaricom, the Kenya-based unit of Vodafone, is to gain the network assets of Essar Telecom Kenya as part of a $120 million (€91 million) deal that will also see Airtel Kenya take over the operator's subscribers.

Essar Capital, part of India's Essar group, said it has reached binding agreements with Safaricom and Bharti Airtel on the disposal of all its telecoms assets in Kenya, where it currently sells mobile services under the yuMobile brand.

The Communication Authority (CA) in Kenya has approved the deal, subject to conditions, and Essar Capital said the transaction will now be filed with the Competition Authority of Kenya (CAK) for approval. Essar Capital added that it expects the transaction to conclude during the fourth quarter of 2014, and said yuMobile would continue to operate normal services in the meantime.

"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," said yuMobile CEO Madhur Taneja.

Taneja also said that Safaricom and Airtel would take over almost 90 per cent of yuMobile's employees.

Safaricom and Airtel Kenya originally gained conditional approval for the acquisition and subsequent break-up of yuMobile in March, but regulatory uncertainty caused some delay and confusion over the progress of the transaction.

At the time, it was confirmed that Safaricom, which is 40 per cent owned by Vodafone, wanted to buy Essar Telecom's passive infrastructure based on 453 sites as well as its data centre, existing offices, spectrum rights and IT infrastructure. Essar Telecom would then take over the company's around 2.55 million subscribers, GSM licences and subscriber contracts.

For Essar, the deal forms part of its strategy to divest its global telecoms portfolio. The sale of yuMobile to its two rivals will also cut the number of mobile operators in the country from four to three. Fixed-line operator Telkom Kenya formed a partnership with Orange (then France Telecom) in 2008 and sells mobile services under the Orange brand. Orange owns a 70 per cent stake in Telkom Kenya.

Orange is also understood to be considering an exit from its business in Kenya where it faces tough competition from Safaricom. In May this year, the French group agreed to sell its Uganda-based operations.

For more:
- see this Essar press release

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