Essar’s assets sale process on course, says Communications Authority Kenya

NAIROBI, KENYA: Communications Authority of Kenya (CAK) has given preliminary approval to a joint bid by Safaricom and Airtel for the mobile assets of Essar Kenya and the final nod could be given next month.

The two firms lodged a joint bid valued at $100 million to buy the assets of Essar Kenya, which operates under the "Yu" brand in the east African nation, in February this year.

"The whole project is at an advanced stage," Francis Wangusi, the director general of Communications Authority of Kenya (CAK), told a news conference yesterday.

He said CAK and the competition authority approved the deal but needed to wait until the end of the month for other parties to raise any objections, in line with legal requirements, to give their final agreement. That could happen next month, he said.

Mobile phone users

Safaricom, which has a 68 per cent share of Kenya's 31 million mobile phone users, will get Yu's network infrastructure and spectrum. Airtel will take Yu's 2.6 million subscribers.

Safaricom plans to use the additional spectrum to iron out quality issues on its network like the frequency of dropped calls, while Airtel needs the extra users to boost its base that now stands at 5 million, well behind Safaricom's 21 million. Telkom Kenya, which is majority-owned by Orange, is the fourth operator in the market with 7.7 per cent of users.

Essar, which started operating in Kenya in 2008, is exiting the Kenyan market after failing to recoup its investment in the competitive mobile market.

The Indian parent company Essar Capital was quoted as confirming early last month that Essar Telecom Kenya (ETK) had sold its 'yu'-branded telecoms business to larger rivals Safaricom and Airtel Kenya for around $120 million.