Econet Wireless Secures Kenyan Network Rollout Funding

Mergers, Acquisitions and Financial Results

New entrant into the Kenyan mobile market, Econet Wireless (trading as Yu) has secured the Sh 35 billion (US$450 million) loan necessary to fund its network rollout. The deal had been delayed by two months after Econet reported difficulties finding credit during the current global economic downturn.

The move comes just a few days after the company's Managing Director unexpectedly resigned. Micheal Foley resigned last Tuesday “to protect his integrity in the midst of a tightening in the company’s liquidity caused by delay in securing credit.” It was reported by local media that suppliers were getting impatient with difficulties in getting bills paid on time.

Acting MD of Econet Wireless Kenya, Srinivasa Iyengar, told the Business Daily Africa newspaper that the network operator expects to commence operation in Mombasa next week and is in talks to sign a network sharing contract with one of the incumbent operators.

Econet is thought to have signed around 60,000 subscribers since its launch in Nairobi last November, and is aiming to secure three million users in the next three years.

Last year, Econet Wireless International (EWI) sold a 49% stake in the company to India's Essar Communications Holdings (ECHL). The companies said that the move would significantly benefit Econet Wireless Kenya (EWK), which is 70% owned by EWI, from a rollout as well as product offering perspective.

Figures from the Mobile World database subscriber database reports that Safaricom is the market leader with a market share of 82.3% with Celtel coming in at 17.6%. Telkom Kenya (Orange) has just started a "mobile" type service. The country itself has a population penetration level of 36%.

The regulator has recently announced that it will make a second attempt at launching mobile number portability - which traditionally benefits new entrants into markets.

Business Daily