YuMobile deal with strategic investors delays expansion

yuMobile CEO Madhur Taneja. The upgrade to 3G is set to help the operator meet growing demand for high-speed wireless services. FILE  

By OKUTTAH MARK,

In Summary

• yuMobile CEO Madhur Taneja says uncertainties over March 4 polls led to the prolonged negotiations.

Yu brand owner Essar Telecom Kenya has been forced to freeze expansion following delays in concluding talks with a strategic investor meant to inject cash into the firm.

The firm on Tuesday said that talks meant to be concluded by September have been pushed to next year, delaying plans by the operator to widen its footprint in Kenya and upgrade its network from 2G to 3G.

Madhur Taneja, yuMobile CEO, said the prolonged negotiations are a product of uncertainties over the March 4 Presidential elections.

“The change is largely attributed to the uncertainty in the political arena earlier this year which had an impact on all businesses,” said Mr Taneja in an interview.

“The financing plans are expected to conclude by early next year. The impact of this is that it has delayed our network expansion which was a key plan for us this year.”

The upgrade to 3G is set to help the operator meet growing demand for high-speed wireless services as consumers use tablet computers and smartphones to surf the web.

READ: yuMobile now seeks to invest in 3G network

Mobile carriers in Kenya like Safaricom, Telkom Kenya and Airtel are on 3G. Kenya has many lower-end users who only make calls and send text messages, but its increasingly young and tech-savvy population is buying higher-end handsets that are increasing data use across the nation.

Financing giant

Yu had appointed financing giant BNP Paribas to lead the talks with the potential investors whose cash injection was also expected to help the telco stave off a liquidity crisis that has seen the operator delay payment to suppliers.

Essar did not say whether the strategic investor will acquire a stake in the telco or will just offer debt to the firm, but in court documents filed in June rival Airtel said Essar was seeking to sell some of its shares.

Airtel said it was informed about the deal while seeking $3.93 million (Sh334 million) from Yu for non-payment of leasing fees from a site-sharing contract.

This will make the first dilution of stake held by India’s Essar since it bought a 35 per cent stake in the firm, from Econet Wireless, in 2008 before increasing its stake to 80 per cent in 2009.