India’s Essar Group is planning to sell its 72% share in Essar Telecom Kenya and remove itself as a mobile service provider in East Africa. Essar said that they have decided to pull out of the Kenyan market due to a tough operating environment and a continued slide in earning.
Essar Telecom Kenya operates the Yu Mobile brand in Kenya, with Kenya being East Africa’s largest telecom market and Africa’s third largest after Nigeria and South Africa.
“The African telecom market is slowly becoming very competitive … making it hard especially for newcomers to remain in the business and make good profits. We expect the situation to be worse in the next 10 years as big operators continue battling to outdo each other,” said Amos Kalunga, a telecom analyst at the Computer Society of Zambia.
Yu Mobile is Kenya’s fourth-largest mobile operator with 2.6 million subscribers and 8.7% share of the market.
“The group last year also sold its stake in Warid Telecom’s operations in Uganda and Congo. Essar’s decision to sell its stake in Yu Mobile also follows the company’s decision to sell its shares in Vodafone India. Essar officials said the valuation of Yu Mobile could be several hundred million dollars, as the group has reportedly invested upwards of US$500 million in growing its business in Kenya,” wrote PC Advisor.
Essar Group is not the first, or only, Indian company to invest in East Africa’s telecommunications industry, as Bharti Airtel also operates in Kenya. The Kenyan mobile service industry is made up of Essar Telecom Kenya, Bharti Airtel, Safaricom and France’s Orange Telecom.
Charlie Fripp – Consumer Tech editor