Essar completes USD153m cash injection for yu; targets one million new users in 2013

8 Mar 2013

Essar Telecom Kenya, which offers mobile services in the country under the banner yu, has received a KES13.05 billion (USD153.08 million) capital infusion from its parent company – India’s Essar Group – to pay its bank loans. yu says that the cash injection will also help it to finance its operating expenses from internal resources, as it seeks to raise funding for further network expansion. The cellco’s chief executive officer Madhur Taneja confirmed to the Star newspaper that his company has been saddled with a high burden of debt, hampering efforts to fund its rollout comfortably from internal revenue generation.

The Indian owner’s backing is good news for yu which last year faced the threat of the Essar Group, which owns an 80% stake in the cellco, possibly pulling out altogether. However, Taneja notes that the capital injection – on top of the KES43.5 billion Essar has invested in the Kenyan operator in the last four years – shows it is fully committed to the venture. Going forward, yu is hoping to secure a KES8.7 billion loan by the end of this month for CAPEX expansion, part of a wider USD200 million in funding it says it needs for the coming years. The new monies are allocated towards expanding capacity in voice and data, as well as its yuCash business and for other radio frequency and transmission technologies, he said. A number of unnamed international banks have already been identified and BNP Paribas has been commissioned to evaluate possible funding options. Ultimately, yu is looking to add a net one million new subscribers this year and to turn profitable by 2014. According to TeleGeography’s GlobalComms Database, it closed out 2012 with 3.25 million mobile subscribers, a market share of 10.5%.

Kenya, Essar Telecom Kenya (yu)