Essar enhances Africa position with purchase of Warid's operations

One of India’s largest telecommunications operators, the Essar Telecom Business Group has enhanced its presence on the African continent – the fastest growing mobile telecommunications market, by agreeing to buy a stake in Warid Telecom’s Africa operations.
This means that Essar is ahead of rivals Bharti Airtel and Reliance Communications. The two cellular giants from India have all made unsuccessful attempts so far to enter the African mobile market.
They both have tried tie-ups with African giant Mobile Telephone Networks (MTN) of South Africa, but something has on all occasions prevented the merger.
The Essar Group, which is the holding company for Essar Telecom has signed definitive agreements with the Dhabi Group, the owners of Warid Telecom for an investment by Essar into the telecom assets of Warid Telecom in Uganda and the Republic of Congo.
Warid Telecom Uganda is a new comer to the telecoms market here but is gaining fast in terms of subscriber numbers on its rivals MTN, Zain and Uganda Telecom.
A press statement said the agreements were signed by His Highness Sheikh Nahyan Mabarak Al Nahayan on behalf of the Dhabi Group and Prashant Ruia, the Group Chief Executive Essar Group in Abu Dhabi on November 15.
The enterprise valuation of the Uganda and Congo operations is collectively valued at
US$318 million. According to the statement, the Essar Group has committed growth capital to both telecom operations to facilitate network expansion and marketing.
Upon completion, the Essar Group will acquire a majority stake (51 percent) in both operations. “The partnership is also expected to bring operational efficiencies to the African operations,” the statement reads in part.
“We are pleased to join hands with a Group that both complements and extends our synergies to expand further into Africa,” Sheikh Nahayan Mabarak Al Nahayan, the chairman of Dhabi Group said.
“Warid has expanded its greenfield operations to become credible competitors and challengers in the market where it operates; the time is now right for the next stage of its growth and evolution.”
Ruia expressed delight to partner with the Dubai group saying the tie-up is in line with Essar’s plan to be a part of the growing telecom market in Africa.
“This transaction with the Dhabi Group augments our successful launch of telecom services in Kenya under the brand ‘yu’ which was a stepping stone for Essar to expand its telecom footprint to the African continent,” Ruia said.
He said Essar’s investment in Warid Telecom in Africa is a part of its strategic plans to grow its business in Africa and the Middle East as it explores business opportunities by foreign partnerships with prominent business groups.
After the successful launch of mobile services in Kenya under the brand ‘yu’, Essar Telecom is now expanding its footprint in East Africa with Uganda and Republic of Congo operations.
Regarded as one of the fastest growing telecom operators in Kenya, Essar Telecom Kenya has over 600,000 subscribers and expects this number to grow significantly as it completes its rollout across Kenya.
The Dhabi Group transaction is subject to regulatory approvals in Uganda and Republic of Congo.
In its home market, Essar holds a 33 percent interest in Vodafone Essar, a joint venture with the Vodafone Group, and is one of India’s largest cellular service providers, with over 85 million subscribers.