Essar to raise stake in ETK from 80% to 100%; new strategic investor sought

1 Dec 2010

Essar Communications Holdings is looking to increase its stake in Essar Telecom Kenya (ETK) from 80% to 100%, according to Business Daily Africa. Essar Communications will reportedly purchase the 20% stake that was owned by local companies Capital Africa, CrossLink and Startnet, all of which are associated with Kenyan businessman Jos Konzolo. Konzolo confirmed that a deal was in the works, but declined to reveal the details pending the conclusion of the transaction.

Industry regulator, the Communication Commission of Kenya (CCK), confirmed that it had received a letter from Essar expressing its intention to file a new ownership structure. Essar has a three-year window within which it must revert to the 70% foreign ownership threshold, and must therefore seek out a local strategic investor capable of contributing towards the funding of its expansion plans. Business Daily Africa quotes a source familiar with the deal who indicates that the local investors have failed to contribute to ongoing recapitalisation of the company, and Essar needs to find local partners which are capable of meeting their financial obligations, thus easing its own financial burden.

Kenya, Essar Telecom Kenya (yu)