Essar Telecom Kenya Ltd (ETKL) has sold its telecom business to Safaricom and Airtel for about $120 million (₹720 crore), a move that marks Mumbai-headquartered Essar Group’s exit from all telecom ventures.
ETKL, which provides telecom services under the yuMobile brand, is the third largest mobile cellular network operator in Kenya with a base of 2.55 million subscribers.
Safaricom will buy ETKL’s network, IT and office infrastructure, while Airtel will acquire the subscribers. As part of the transaction, close to 90 per cent of the yuMobile’s employees will be absorbed by Safaricom and Airtel, Essar Capital said in a statement.
Essar Capital, which controls ETKL through Essar Global Fund, expects the transaction to conclude during the fourth quarter of 2014.
“We have structured the transaction in such a way that our customers will not need to change their mobile numbers or SIM cards, after this transaction. Moreover, we expect that the intended transaction will bring bigger benefits through an expanded product bouquet to the customers,” said yuMobile Chief Executive Officer Madhur Taneja.
The sale of yuMobile marks the exit of Essar from telecom businesses, which, according to reports, had earned it nearly five times return on investments.
The sell-off comes close on the heels of Essar selling its US-based outsourcing firm Aegis’ assets in the US, the Philippines and Costa Rica to Teleperformance for $610 million. The group had earlier sold its telecom tower business – Essar Telecom Infrastructure – set up in 2007, to American Tower Co for $415 million in 2010.
Later in 2011, Essar sold its 33 per cent stake in Vodafone Esssar (now Vodafone India) for $5.2 billion.