Sale of Yu Mobile to Safaricom and Airtel agreed

Essar Telecom agreed to sell its Yu Mobile business – the third-largest mobile operator in Kenya – to larger rivals Safaricom and Airtel in a KSH10.5 billion (US$120 million) deal.

Under the agreement, approved by Kenya’s Communication Authority (CA), Safaricom receives Yu Mobile’s IT and network infrastructure while Airtel acquires the mobile operator’s GSM licences and subscribers.

The deal is expected to go through in the fourth quarter, once CA’s pre-conditions are met.

Essar Global Fund Limited (EGFL), which includes Yu Mobile as part of its portfolio, sold its US-based outsourcing company Aegis to Teleperformance for US$610 million in July, as part of its wider divestment from the telecom sector.

One of the Kenyan deal’s pre-conditions, according to previous local media reports, is the payment of Yu Mobile’s outstanding licence fees, amounting to US$5.4 million.

Another CA clause, to which Safaricom CEO Bob Collymore originally objected, is the opening up of Safaricom’s hugely popular M-Pesa money transfer network to rivals. Safaricom, however, has subsequently relented under regulatory pressure.

Subscribers to rival money services from the likes of Airtel, Telkom Kenya Orange and MVNOs can now pay in and collect cash from M-Pesa agents.

As part of the agreement, close to 90 per cent of Yu Mobile’s employees are expected to be absorbed by Safaricom and Airtel.

Yu had 2.6 million connections at the end of March 2014, behind market leader Safaricom (21.6 million). Airtel had 5.3 million connections, while Orange (Telkom Kenya), in fourth place, counted 2.5 million.