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| Essar set to get deeper into African telecom |
| BS Reporter / Mumbai Jul 20, 2009, 00:14 IST |
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Likely to buy majority stake in assets there of Abu Dhabi royals.
The Essar Group has initiated discussions to pick up a substantial stake in the African telecom assets of the Dhabi Group, an investment company led by members of the Abu Dhabi royal family.
Through its subsidiary, Warid Telecom, the Dhabi Group owns mobile networks in Pakistan, Bangladesh, Congo, Uganda and Cote d’Ivoire. The discussions with the Essar group are for the latter three African countries’ (where services have not started) operations only. Currently, the total subscriber base of Warid Telecom is over a million, which primarily includes GSM services. These began only a year earlier.
A statement issued by the two groups today said the “two companies had agreed to enter into exclusive discussions in relation to an investment by the Essar Group into the telecommunications portfolio of Dhabi Group’s African assets”. Standard Chartered Bank is acting as exclusive financial advisor to the Dhabi Group.
However, informed sources said Essar will pick up a controlling stake in the African telecom assets.
A preliminary agreement between the Dhabi Group and Essar was signed in Abu Dhabi, at a meeting between Essar’s Group CEO Prashant Ruia and Dhabi Group Chairman Sheikh Nahayan al-Nahayan.
The announcement comes just a fortnight after Essar bought a majority stake in Econet Wireless Kenya, offering mobile services in that country under the ‘Yu’ brand name. The company already has around 400,000 subscribers on its network in Nairobi and Mombasa, and expects the number to grow significantly as it completes a roll out across Kenya by year-end.
Essar holds a 33 per cent stake in Vodafone Essar, a joint venture with the Vodafone Group, and is one of India’s largest cellular service providers, with over 75 million subscribers. The group owns Essar Telecom Infrastructure, one of the largest independent telecom tower infrastructure providers in India, and operates an outsourcing services business under the Aegis brand, with over 33,000 employees globally across 32 delivery centres in the Philippines, Costa Rica, the US, Africa and India. The Ruias and their associates also have a pan-India licence to run mobile services under Loop Telecom, which has just started operations.
The Dhabi group, with the market value of its porfolio worth $10 billion, has invested in various areas, which include real estate, automobiles, pharamaceuticals and banks, amongst others. Warid Telecom in Pakistan has already sold a 30 per cent equity stake to Singtel.
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