Kenya’s Yu mobile phone operator is continuing its efforts to increase its market share and customer service in the country. It announced recently that it was hoping to reduce its “reliance on local shareholders” and parent company Essar Group by getting a $250 million loan to expand and upgrade its local network in the East African country.
According to statements published by local media, Yu has appointed the French banking group BNP Paribas “to arrange the financing that will be staggered over the next three years as part of the $250 million fundraising plan.”
It said the loan “will reduce pressure on India’s Essar Group, which owns 80 percent of the operator, and local shareholder Startnet, which has a 20 percent stake and is associated with businessmen Peter Kibiriti and Jos Konzolo.”
The move could help to strengthen Yu’s overall service delivery.
“The poor participation of locals in financing the huge capital outlays of telecom firms has been a source of shareholder friction across Kenya’s telecom industry, prompting businessman Naushad Merrali to sell 15 percent of his 20 percent stake in Airtel Kenya (then Zain),” a report in Business Daily said.
Country Manager Madhur Taneja, told the Business Daily that “as a loss making company, it has relied on shareholders for the bulk of the KES 40 billion Yu has invested since its entry in Kenya four years ago.”
The manager added that Essar “is seeking to expand into rural Kenya and upgrade its network to 4G, which it will jointly own with the government and rival operators.”