Econet Wireless Kenya to come alive as Yu

Econet Wireless Kenya is set to launch operations as the country’s third mobile operator, by the end of November, according to Michael Foley, CEO for Africa of Essar Communications. The journey to commercial launch has been a long and twisting one for the Econet Wireless International, which was initially issued the licence in 2004 following lengthy court battles.

It had been suggested that Econet in its own right could not finance the rollout of the network, and was rescued earlier this year by Indian mobile telecoms company Essar Communication, a subsidiary of Essar Global, which acquired a 49 per cent stake in the Kenyan licensee.

Essar acquired the stake from Econet Wireless International, which held a 70 per cent stake controlling stake in the licensee, and had been reported to be scouting for a suitable financier since the Communications Commission of Kenya confirmed the award of the licence in September 2007.

At the time of the Essar deal, it was reported that the Indian operator would invest as much as US$500 million on the rollout of the GSM network. The Kenyan operation will be branded ‘Yu’, and represents the first expansion outside of India for Essar in the communications sector.

“We thought the Kenyan opportunity was a good one as it combines low penetration with high prices, and high margins,” Foley commented. “There are incumbent business models in place at the moment and there is an opportunity to reap benefits from improved technology. It is as simple as who has the gold, rules.”

Yu has worked with Ericsson as its primary infrastructure provider, with Foley believing that low-cost infrastructure is not always the best situation for greenfield players in emerging markets such as Africa. Foley said it would have taken the mobile licensee five months to have rolled out the network in preparation for launch, and that much of the nascent operator’s strategy will be based on automation, a focus on processes and outsourcing.

Telkom Kenya (Orange Kenya) is also set to enter the mobile telecoms space imminently, bringing to four the total number of players, including Safaricom and Zain.