Essar Telkom Yu’s parent company has officially closed the acquisition deal with leading telecommunication companies Safaricom and Airtel for $120million by signing binding agreements in the transaction that has received approval from the communications Authority of Kenya with parties meeting certain preconditions.
The deal will see Safaricom take over Yu’s network, IT and office infrastructure while Airtel will acquire the company’s subscribers. YuMobile customers will still maintain their mobile numbers even after the buy out with 90 per cent of Essar Telcom employees absorbed by both companies.
Yu mobile’s acquisition comes after a long time of shaky negotiation that had safaricom drop out at one point due to tight regulatory conditions by Communications Authority of Kenya. Airtel aims at being one of top two telcos in countries where it is operational in Africa, in November 2013, Airtel had acquired Warid’s Congo Brazzavile business, which added 1 million subscribers to Airtel’s 1.6 million user base in the country. Earlier in the year, in April Airtel had also acquired Warid’s Uganda business. A month before that Airtel increased its stake in Airtel Nigeria to 79.06%, buying 13.36% stake from some existing shareholders.
YuMobile first launched in 2007 joining Airtel and Safaricom in the competitive telecommunications industry that has seen the company record losses over the years of operation with deteriorating subscriber base. Early 2013, the company secured a capital injection of USD150 million from its Indian parent company to help pay bank loans that incurred huge interest costs as well as settle debts for the then existing business.
Parent company Essar Group owned 80% of the company and invested around US$500 million over the past four years, but still struggled to generate meaningful returns from its investment. The company also set off raising $100 million in January this year to finance the expansion of the mobile network which still left the company facing a funding shortfall which led to sorting sale approval from Communication Authority.
The brand will continue to operate and serve customers offering uninterrupted services.YuMobile’s Kenya Chief Executive Mahur Taneja reassured customers that they will continue enjoying our products and services uninterrupted. “Moreover, we expect that the intended transaction will bring bigger benefits through an expanded product bouquet to the customers.” he said
The acquisition will provide the much-needed consolidation in the Kenyan mobile telecommunication market and provide customers with fewer mobile operators and make it better equipped to enhance service delivery and provide customers with greater product offerings.