Essar Kenya Seeking $250 million in Bank Loans
Essar Kenya also known as YU is seeking bank loans worth $250 Million in an attempt to fund its network upgrades and remain competitive, as its competitors consolidate their positions in data and voice offerings.
“As a loss making company we have relied on shareholders for the bulk of the Sh40 billion ($470 Million) yu has invested since its entry in Kenya four years ago,” Madhur Taneja, the country manager of Essar Kenya told the Business Daily in an interview Thursday.
“We are racing ahead of time by raising the $250 million which will need new markets and upgrade our infrastructure,” added Mr Taneja.
The company is 20% owned by local businessmen Peter Kibiriti and Jos Konzolo, and 80% by India’s Essar Group. The Essar Group took control of YU in September 2009, when it raised its stake from 25% to 70% after it bought the controlling stock from Econet Wireless.
This is a bright sign that the Kenya based company will turn around its prospects, as two months ago there were reports widely reported that indicated that Essar was contemplating exiting the Kenyan Telecoms Market. According to India’s Financial Chronicle the exit was prompted by tough operating environment that has seen mobile revenues decline. Though yuMobile Country Manager,Madhur Taneja did not confirm or deny an impending sale, he indicated its local operations are unlikely to be affected by any transaction meant to raise capital.
The company has its eyes set on investing in LTE (4G) in Kenya along with Government. “To meet these future investment needs, we are evaluating an opportunity to raise capital, BNP Paribas has been appointed for the purpose,” said Taneja adding this can either be through equity or debt.