After exiting telecom businesses in India, the Essar Group is following suit in Africa. The telecom service operations it acquired from Warid Telecom in Uganda and Congo are being returned and the group is looking for a buyer for its Kenya operations, two sources told ET.
The Indian steel-to-outsourcing conglomerate no longer views telecom as core or strategic, one of the sources said.
In March, Essar agreed to sell its 33% stake in Vodafone Essar , India's third-largest telecom operator after Bharti Airtel and Reliance Communications , to UK-based Vodafone.
The group had struck a deal for majority stake in Warid Telecom's operations in Uganda and Congo in November 2009, with an enterprise value of $318 million. A third source said the deal fell through because required approvals were not received.
"It was mutually decided between the partners - Essar and Warid Group - not to proceed with the deal closure as certain condition precedents pertaining to government clearance were not met," Essar said in a statement on Tuesday.
The assets are now being returned to Warid, which will have to pay back Essar. The sources did not say how much Warid would pay. An email to Warid, a company of UAE's diversified Dhabi group, went unanswered.
Essar is also looking to sell its telecom operations in Kenya. The group had bought it for about $150 million and invested another $100 million in it. It would be willing to sell it for about $300 million.
Another source said Essar had approached Bharti, but it declined the proposal as it is still consolidating its acquisition of Zain in the region. The group has approached other operators in Africa, who so far have not expressed interest, said the second source.
Essar had shuffled management at the Kenya telecom company recently in preparation to sell, he added.
"Essar remains committed to the African market and is satisfied with its operations in Kenya. It is not evaluating any sell off options," the company said, in response to a query on Kenya.
Essar operates telecom services in Africa under the Yu brand. In Kenya, the company is the third largest operator, competing with Safaricom, Orange of France Telecom and now Bharti Airtel.
If it is able to sell the Kenya business, the group will make a full exit of the telecom sector.
The group has come under scrutiny of federal investigators looking into the 2G-spectrum scam, in relation to approvals received by Loop Telecom in which Essar holds a minority stake.
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