The Communications Authority of Kenya has given preliminary approval for the proposed takeover of Essar’s yuMobile by Airtel and Safaricom.
Airtel and Safaricom joined forces in February to bid $100 million for Essar’s Kenyan unit – the smallest operator in the market. Indian firm Essar entered the market in 2008, and is now pulling out after an insufficient return on its investment.
Final approval from the regulator is likely to be granted in November, with the CAK stating that the process was “at an advanced stage”. While the transaction has the approval of both the CAK and the competition authority, legally they must provide a grace period for other parties to raise objections before granting final approval.
If the deal goes through, Airtel will take over yuMobile’s subscribers and GSM licences while Safaricom will assume control over its infrastructure and spectrum, which it will use to improve the quality of its network.
Safaricom and Airtel are the first and second-placed operators respectively. Taking over yuMobile’s customers will certainly bolster Airtel’s currently total of 5.5 million subscribers, but it will still lag significantly behind its bid partner’s 22.3 million connections. Both are tailed by third placed Telkom Kenya with 2.8 million.
A major condition for the deal was that Safaricom and Airtel would pay off yuMobile’s outstanding licence fees – a cost of $5.4 million each.