Safaricom raises bid for yuMobile assets to Sh10.5bn
Safaricom CEO Bob Collymore (right) and chairman Nicholas Ng'ang'a during an investors briefing. Safaricom has raised the acquisition price of yuMobile assets to Sh10.5 billion and signalled that it expects to close the transaction in a few months. PHOTO | SALATON NJAU
What you need to know:
The breakthrough comes after the Communications Authority of Kenya (CA) relaxed earlier conditions which had put the buyout on ice.
Safaricom had earlier set a price tag of yuMobile assets at Sh8 billion.
The joint bid for the Indian-owned Essar Group’s Kenyan operation will see Safaricom acquire yuMobile’s base stations and equipment while Airtel will acquire the 2.7 million subscribers and licences registered under the firm.
Safaricom has raised the acquisition price of yuMobile assets to Sh10.5 billion and signalled that it expects to close the transaction in a few months.
Safaricom chief executive Bob Collymore told Bloomberg News the main parties to the deal; Safaricom, Airtel and yuMobile, are set to submit an application to the competition regulator for approval of the transaction.
The breakthrough comes after the Communications Authority of Kenya (CA) relaxed earlier conditions which had put the buyout on ice.
“Safaricom expects its joint acquisition of rival yuMobile to be completed within months at a cost of about $120 million,” Bloomberg News reported Wednesday quoting Mr Collymore who is in Washington DC attending the US-Africa Summit.
Safaricom had earlier set a price tag of yuMobile assets at Sh8 billion.
The joint bid for the Indian-owned Essar Group’s Kenyan operation will see Safaricom acquire yuMobile’s base stations and equipment while Airtel will acquire the 2.7 million subscribers and licences registered under the firm.
The Communications Authority (CA) is reported to have said earlier this week that it had withdrawn at least four of the 13 terms it had set for the parties before approval of the acquisition, allowing them to proceed with the transaction.
READ: Tough options for Safaricom’s Collymore The Business Daily could not, however, establish what informed the rise in the valuation as Madhur Taneja, yuMobile managing director, said he could not comment on the matter.
The acquisition bid was first made public in March and was expected to be sealed by end of June, but the parties termed the 13 conditions set by the communications regulator as unrealistic, slowing the process.
Key among them was for Safaricom to open up its mobile money network and also meet the minimum threshold on quality of service, conditions that made the leading mobile provider threaten to pullout of the transaction.
If successful, the transaction will see Safaricom get extra base stations and frequencies which it needs to accommodate an expanding customer base to help improve its quality of services besides getting headroom to roll out more services on the available frequencies.
Airtel Kenya on the other hand will take over 2.75 million subscribers and licenses, boosting its market share to 26.4 per cent from the current 17.6 per cent and narrowing the gap with Safaricom, which has 67 per market share by subscriber numbers.
Francis Wangusi, director general of CA, was quoted saying he had revised the conditions set for approval of a plan by Airtel and Safaricom to acquire yuMobile.
Safaricom last month announced it had agreed to open up its M-Pesa agency network to competing companies; and had also struck a deal with the regulator on new parameters for measuring the quality of service during renewal of its license in June.
“I am hoping we can close this in a couple of months,” Mr Collymore told Bloomberg News.
Mr Taneja Wednesday said the parties would issue a comprehensive update on the transaction in the coming weeks.
“I cannot comment on the matter now or the figure provided by Mr Collymore as this time, however I promise to furnish you with the details in the coming weeks,” Mr Tanaje told the Business Daily.
Facing lean times in the Kenyan market, India’s Essar Telecom, which owns the yuMobile brand, has over the past few years sought buyers for its business.
The deal comes at a time when the Kenyan telecoms sector is undergoing critical developments. In April, the regulator gave three Mobile Virtual Network Operator licences to three companies, expected to step up competition in the sector.
