Airtel Networks Kenya Ltd. (Airtel Kenya) has signed a definitive agreement with Essar Telecommunications Kenya, which operates under the brand name yuMobile, to acquire its 2.7 million subscribers. This deal is subject to approval from Competition Authority of Kenya (CAK) and is likely to be concluded by the fourth quarter of 2014, the company has said.
Airtel Kenya had first sought approval to acquire the subscriber base of Essar’s yuMobile from Communication Authority (CA) of Kenya in March 2014. Later that month, Airtel Kenya and Safaricom had received approval from CA of Kenya to acquire the telecom license and subscribers of yuMobile. The final approval was dependent on both companies paying $5.4 million as fee for Essar Telecom Kenya Ltd.’s licences apart from meeting other conditions. While Airtel has now acquired yuMobile’s user base, Safaricom has acquired yuMobile’s base stations and associated infrastructure.
No official word on the deal size has been received by Medianama, but this Economic Times report pegs the total deal value at $120 million. yuMobile’s CEO Madhur Taneja told ET that this deal will not affect the customers. They’ll be able to retain their numbers and won’t have to change their SIM cards either. Close to 90% of yuMobile’s employees are expected to be absorbed by Airtel Kenya and Safaricom.
Airtel’s Africa Stratgey
Airtel wants to be one of the top two telcos in countries where it is operational in Africa. In fact, during Airtel’s Q3-FY14 earnings conference call, managing director and CEO (International) of Bharti Airtel Manoj Kohli said that the company was in the number one or two position in 14 of the 17 operational African countries. He also mentioned that a third placed player or even a weak second placed player may not earn profits in the long run in Africa. Airtel had been on the lookout for both organic and inorganic growth in several African markets.
Earlier this year, Airtel had also announced a new structure in Africa, with operations now clustered into Strategic Business Units (SBU’s), whose heads will report to the Christian de Faria, the MD & CEO of Airtel 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.
Earlier this year, Airtel signed an agreement to sell and lease back over 3,100 towers in four countries across Africa to the telecom tower operator Helios Towers Africa (HTA), in a bid to reduce debt and significantly reduce the ongoing capital expenditure on passive infrastructure and focus on its core business and customers.
Airtel Money’s Africa active customer base increased 22.9% quarter-on-quarter to 4.3 million in the quarter ended June 30,2014, as against 3.5 million in the previous quarter.