Wednesday, October 22, 2008

Essar buys 49% of Econet, will fund Kenyan launch and international expansion

Econet Wireless International (aka Econet Wireless Group), the telecoms group founded by Zimbabwean entrepreneur Strive Masiyiwa, has sold 49% of its shares to Essar Communication Holdings, a subsidiary of Indian conglomerate Essar Group, reports Business Daily Africa.

The price for the stake was not disclosed, but according to law firm Anjarwalla & Khanna Advocates, who advised on the deal, Essar will provide close to USD500 million to fund Econet’s long-awaited rollout of mobile services in Kenya as well as other international projects. Econet owns 70% in the third mobile licensee in Kenya but, despite receiving its operating concession in 2003, has not been able to roll out a commercial network due to protracted court battles, and even since the Kenyan regulator cleared it in September 2007, the group and its local partners have lacked the funds to launch services.

In India, Essar is a partner in joint venture cellco Vodafone Essar with the UK’s Vodafone Group, which also has a 40% stake in Kenyan mobile operator Safaricom. However, a source at Anjarwalla & Khanna Advocates added that in Kenya, Essar was acting completely independently of Vodafone, and that there are no issues of cross-ownership or conflicts of interest. The source also stressed that the investment in Econet Wireless International was not limited to the Kenyan market but encompassed other countries in Africa and worldwide that Econet was interested in. Econet is headquartered in South Africa and has telecoms interests in Zimbabwe, Kenya, Botswana, Lesotho, Burundi, Malawi, Nigeria, New Zealand and the UK.

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