Essar Kenya (yu) Looking to Sell for $300 Million, Reports
There are reports appearing on the website of a fairly respected Indian Financial Magazine, Economic Times of India, that Essar Kenya (yu) is looking for a buyer of its Kenyan operations. This move might have been expected considering the fact that Essar sold its 33% stake in Vodafone Essar to Vodafone UK. According to the article, the company does not view telecom as strategic anymore and consider exiting the business altogether to concentrate on steel business.
The group had previously struck a deal for majority stake in Warid Telecom’s operations in Uganda and Congo in November 2009 valued at $318 million. Essar Kenya has confirmed that it has exited the deal with Warid Group. Essar Kenya new CEO, also from Warid Group, says “It was mutually decided between the partners – Essar and Warid Group- not to proceed with the deal closure as certain condition precedents pertaining to government clearance were not met.“
Essar Kenya will return all assets to Warid Group as agreed. The ET indicates that Essar Kenya is looking to sell its Kenyan operations for around $300 Million after buying the business for $150 Million and investing around $100 Million on it. Essar Kenya CEO and Essar head office in Mumbai disagrees. In a statement it says, “Essar remains committed to the African market and is satisfied with its operations in Kenya. It is not evaluating any sell off options.”
A source from Bharti Airtel Africa has confirmed to Techmtaa that Essar approached them with an interest of selling its Kenyan arm. Bharti was not interested because it was consolidating just as it is written in the ET article. Essar Kenya is the fourth largest operator trailing Safaricom, Airtel and Orange in the respective order. Industry pundits are dumbfounded but are not ruling out a full exit from the Kenyan market arguing that with the dynamics in the Kenyan market, Essar has almost a nil chance of ever breaking-even anytime soon.
Already key managers have left Essar Kenya with the former CEO, Atul Chatulverdi joining Kenya Data Networks as Chief Sales and Marketing Officer, a position formerly held by Vincent Wang’ombe. Vincent is currently on leave and it is not clear which position he will return to.
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