Mobile operator Essar Telecom Kenya (Yu Mobile) is looking for strategic investors to inject cash in the company in order to pay its suppliers, local publication Business Daily reported citing court documents.
The fundraising plan is expected to be…
Mobile operator Essar Telecom Kenya (Yu Mobile) is looking for strategic investors to inject cash in the company in order to pay its suppliers, local publication Business Daily reported citing court documents.
The fundraising plan is expected to be concluded in Q3 and Viettel is rumoured to be among the interested parties. The Vietnamese company is already present in Mozambique and recently acquired a licence to operate in Cameroon.
According to Business Daily, details of the potential stake sale were revealed by local competitor Airtel, which is seeking approximately US$4m from Yu Mobile for non-payment of leasing fees from a site sharing contract. Airtel has reportedly asked the court to stop the share sale.
Indian conglomerate Essar owns 80% of Yu Mobile while the remaining 20% is controlled by local businessmen.
In early February this year, the Kenyan operator had received a Sh13bn (US$150m) capital injection from Essar to pay off its debts.
Back in October last year, the struggling telco was also said to be looking to borrow up to US$200m in order to finance expansion plans and had appointed BNP Paribas for advice on a possible funding.
Reports explain that Yu, as the smallest of Kenya’s four mobile operators, has been particularly affected by the ongoing price war in the market.
According to the company, its market share stands at approximately 10% against 65% for Safaricom, Kenya’s leading operator.
Binta Drave, Equity Analyst at Exotix, told TelecomFinance in October that “[Yu’s] competitors Airtel and Orange Kenya are also loss-making. The only way these companies can finance their operations is to rely on their parent company or borrow money.”
She added: “Orange Telecom was in a similar situation a few months ago where they had to secure a loan and I think we will see more of this kind of thing in the Kenyan telecoms industry.”
Yu Mobile was not immediately available for comment.
