yuMobile goes ‘mteja’ as rivals eye over 2 million subscribers

Telecoms

Kenya’s third largest mobile phone operator, yuMobile, stares at imminent closure, with more than 240 jobs at risk. And this is really not that surprising given that, the firm, owned by Indian conglomerate, Essar Group, has lately been struggling to shrug off huge operational losses.

In a late night meeting this Friday evening, yuMobile CEO, Madhur Taneja, summoned his top brass to break the depressing news that the mobile operator has applied to the Communications Commission of Kenya seeking to sell its infrastructure and customers to rivals Safaricom and Airtel respectively. Mr Taneja confirmed to Weekend Business the application to CCK. This effectively sets off a scramble for yuMobile’s juicy assets, which includes a good network consistently ranked the best in the local market.

Safaricom, though the largest mobile operator in customer numbers and the most profitable listed company has struggled to maintain a good network, which is notorious for dropped calls. Safaricom is likely to go for yu’s infrastructure to wad off other competitors – most likely MTN or Viettel- the Vietnamese telecom, from gaining a foothold in the Kenyan operations. Tough times Safaricom would also want to protect itself from the likes of Equity Bank and Nakumatt, which have applied for mobile telecommunication services.

In essence, if Equity Bank and Nakumatt, the retail chain, get the license to provide mobile services they would still need to lease the infrastructure from Safaricom and other telecoms. Airtel, the second largest operator will also see this as an opportunity to buy the subscribers of yuMobile to add onto its 5.5 million subscribers. yu had 2.7 million subscribers, according to the latest official figures by the CCK for the quarter, which ended in September 2013. But yuMobile has been losing subscribers at an alarming rate. In June 2013, it had three million customers and by the end of September 2013, there were 2.8 million subscribers.

For Airtel, which has thought of all ways to dent Safaricom’s dominance, it will look at these subscribers as an opportunity to push its internet service and the mobile money transfer service that it has tried to revamp and market in the past few months.

It was not immediately clear whether the Competition Authority of Kenya has been involved in approving the share sale deal to yu’s competitors, but observers scoffed at the move saying it is likely to hurt Kenyan workers. About 240 jobs are at stake when yuMobile is sold off. Unionist and workers’ spokesperson Stephen Kaapei yesterday expressed fears that the employees may be victim in the sale deal, as many careers may be ended prematurely without structured negotiation for compensation.

Kaapei says they moved to court to secure justice on behalf of workers but were asked to resolve the matter out of court. It is understood management has proposed a paltry half a month’s salary for each year worked. “The management is still adamant and have refused to negotiate conclusively with workers and we are worried because the top managers who are non Kenyans may have been handsomely rewarded with questionable amounts,” Kaapei told Weekend Business. “There is no meaningful communication coming forth from the management and workers are jittery and worried of their careers,” Kaapei said. Lawyer, Charles Kanjama, representing the workers said there are many questionable moves and his clients are seeking clarification on. “Workers are demanding to know if the valuation of the business and property was done well and whether their compensation will be fair and transparent,” Kanjama said.