Essar exits telecom business monetising $6 billion

Essar Global Fund Ltd (EGFL), an investment fund managed by Essar Capital, on Friday said it has fully exited from global telecom business after successfully closing the sale of its Kenyan unit Essar Telecom Kenya Ltd (ETKL).

The worldwide sale of Essar's telecom assets has generated an aggregate value of over $6 billion, according to a company statement.

ETKL, which operates the popular yuMobile telecom service in Kenya, has sold its network, IT, and office infrastructure to Safaricom, while Airtel has taken over the 2.55 million subscriber base of yuMobile. The total value of the deal is approximately $120 million.

News about the Kenyan asset sale surfaced in August 2014. (See: Essar exits Kenya telecom venture in Kenya to Bharti, Safaricom)

As part of the transaction, about 90 per cent of the employees of yuMobile have been absorbed by Safaricom and Airtel.

''We are delighted to have completed this complex transaction and we are thankful to the Kenyan government and the various regulators for their support in facilitating the transaction,'' CEO of yuMobile, Madhur Taneja said.

"Completion of the ETKL transaction realizes Essar Capital's strategy of divesting EGFL's investments in the global telecommunications sector,'' Essar Capital's board member Firdhose Coovadia said.

''The divestment will serve to increase the focus of EGFL on maximizing the value of its energy, metals and mining, and infrastructure sector portfolio investments and continue to divest from its non-core portfolio investments," he added.

Essar began the divestment of its telecom business as early as in 2010 by selling telecom tower business to American Tower Company (ATC) for $425 million. In 2011, the company sold its 33-per cent stake in Vodafone Essar for $5.2 billion to Vodafone and recently in July 2014 it sold Aegis, the US-based outsourcing company to Teleperformance for $610 million.

Cayman Islands-based EGFL is a global investor controlling a number of world-class assets in core sectors of energy, infrastructure, shipping and BPO. The aggregate revenue of its portfolio companies is around $35 billion. The group employs over 60,000 people across 29 countries.

Airtel said it has successfully integrated yuMobile customers into its network.

''The process, which started in August 2014, has seen the 2.55 million yuMobile customers successfully integrated into the Airtel network,'' Airtel said.

Airtel has now become the second-biggest mobile operator in Kenya after Safaricom, with an enlarged customer base of 8 million and a 26.6-per cent market share.

Safaricom has around 21 million customers and about two-thirds of the market, while Telkom Kenya is in third position with 2.6 million customers.

Airtel, India's largest telecom operator, has over 300 million customers in 20 countries across Asia and Africa.