Kenya’s Yu Mobile seeks US$200M loan to expand operation

The decision was reached after what the company termed as a “difficult past in dealing with its local partners, who are incapable of meeting their financial obligations to the firm”.

Yu Mobile expects the expansion to reduce the pressure on India’s Essar Group, which own 80 percent of the operator, with local shareholders owning 20 percent through Starnet.

The company has already appointed French global banking group BNP Paribas to assist it in the financing, which will be distributed over the next three years, raising a total of US$250 million.

“As a loss making company we have relied on shareholders for the bulk of the Sh40 billion Yu has invested since its entry in Kenya four years ago,” Madhur Taneja, the country manager of Essar Kenya told the Business Daily.

“We are racing ahead of time by raising the $250 million which will need new markets and upgrade our infrastructure,” Taneja added.

Since its entry into the Kenyan market, Essar has had to deal with many market issues, including the halving of the call tariffs back in 2010, something that forced the telcos in Kenya to shift to data and other services like mobile money.

Yu Mobile has however not been performing well in these alternative revenue sources, hence the decision to seek for the loan.

Yu Mobile may however be making some headway, considering it now boasts of 9.1 percent  of the market share, a tremendous growth in a year. In June last year, it held only 3.3 percent of the same.