Decision on Essar’s future set to be revealed within six months

7 Sep 2012

Essar Telecom Kenya, which operates under the ‘yu’ brand name, has revealed that it will make a decision on new funding options within the next six months. The Star quotes country manager Madhur Taneja as saying: ‘It is not something that can be rushed as due diligence is carried out. Once the process is concluded, we would take key decisions on the best way moving forward for our operations’. Last month the struggling cellco enlisted French banking group BNP Paribus to help it source capital to meet future investment needs, taking steps to deny that BNP had been retained to find a buyer for yu. Nevertheless, Taneja’s latest announcement is arguably open to interpretation, prompting fresh speculation that India’s Essar Group could yet cash in on its last remaining telecoms asset in Africa.

If the sale does go ahead, one likely suitor for the stake is Viettel Corporation, which is wholly owned by the Vietnamese government via the Ministry of Defence; last month the company earmarked the Kenyan wireless sector as its next target as it bids to grow its emergent mobile business in Africa. Elsewhere, pan-African giants MTN and Vodacom are likely to monitor the developments with interest. Although neither company has been inclined to enter the ultra-competitive Kenyan wireless market as a green-field operator, a takeover would make commercial sense. In March this year MTN admitted that it was targeting ‘bolt-on’ deals inside its ‘comfort zone’, while May saw Vodacom hint that it was keen to explore any deals in Africa in the USD100 million price range.

Kenya, Essar Telecom Kenya (yu)