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Essar eyes majority stake in Dhabi’s African assets

Essar eyes majority stake in Dhabi’s African assets
PTI
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First Published: Sun, Jul 19 2009. 03 54 PM IST
Updated: Sun, Jul 19 2009. 03 54 PM IST
New Delhi: Continuing its global expansion spree, Ruias-promoted Essar Group on Sunday said that it has entered into exclusive discussions with the Dhabi Group of UAE to buy out a majority stake in its telecom business in Africa.
“The Dhabi and Essar Groups have agreed to enter into exclusive discussions in relation to an investment by Essar Group into the telecommunication portfolio of Dhabi Group’s African assets,” the Essar Group said in a statement.
The Dhabi group offers telecom services in African countries under the brand name Warid Telecom. The company has recently acquired telecom licences for two more markets - Uganda and Congo.
The transaction will involve an equity infusion into these businesses as growth capital and will be the basis of a partnership to create a significant presence in Africa.
The Dhabi group has engaged Standard Chartered Bank to act as an exclusive financial advisor for the deal.
Essar has significant interests in telecommunications services, spanning mobile telephony, telecom tower infrastructure, telecom retail and IT/telecom enabled services.
It holds a 33% interest in Vodafone Essar, which is a joint venture with the Vodafone Group, and is one of India’s largest cellular service providers, with over 75 million subscribers.
The group has also recently launched mobile services in Kenya as a fourth mobile cellular network under the brand ‘yu’.
Asked about the investments involved in the proposed deal with the Dhabi group, Essar officials declined to comment saying, “We have just entered into an exclusive agreement. Now the due diligence will start and subsequently the contours of the deal will be finalised.”
Essar said that this was in line with group’s strategy of expanding its operations in Africa.
Telecom businesses in Africa have become a major potential for Indian telecos to invest in, mainly due to scope for expansion in view of low penetration of telecom services.
Other than Ruias, Sunil Mittal-promoted Bharti Airtel is also currently pursuing exclusive talks with African telecom major MTN.
The proposed Bharti-MTN deal includes both cash as well as equity swap to create a $23 billion company on completion of deal.
With a firm foothold in India, the Essar Group is focused on global expansion with projects and investments in Canada, the US, Africa, the Middle East, the Caribbean and South East Asia.
The Dhabi Group and its chairman HH Sheikh Nahayan Mabarak Al Nahayan lead a consortium of investors composed of private equity and family offices in the region.
The Group has diversified business interests with a focus on emerging market opportunities in financial services, telecommunications and real estate.
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First Published: Sun, Jul 19 2009. 03 54 PM IST