New Delhi: Bharti Airtel Ltd, the world’s fourth largest telecom operator by subscribers, is working on a deal to acquire the telecom licences and subscribers of Essar Telecom Kenya Ltd.

Bharti Airtel and its Kenya-based telecom rival Safaricom, the largest telco in that country, jointly applied to the communications authority of Kenya for permission to acquire Essar Telecom Kenya, the nation’s smallest operator.

The authority said it had received applications from the firms to allow the transaction that will see Safaricom and Bharti spend a combined $100 million (around 619 crore today), Reuters news agency reported.

The Essar group subsidiary operates under the brand name yuMobile.

“The proposed arrangement envisages over 2.7 million customers of Essar Telecom Kenya becoming part of Airtel Kenya’s mobile network," Bharti said in a statement on Tuesday. “The proposed association will undergo seamless integration once definitive agreements are signed and requisite regulatory and statutory approvals are received."

yuMobile said it too filed an application with the communications authority to transfer its mobile business, operated by Essar Telecom Kenya.

“In the application filed today, the company indicates that it is engaged in substantive talks with two potential suitors who are willing to takeover its subscriber base and assets, subject to requisite approvals by the authorities," yuMobile said in a statement.

Bharti Airtel is present in 17 countries in Africa, after it acquired Kuwait-based telco Zain’s Africa assets in June 2010 for almost $11 billion.

The stock has been declining recently mainly on account of the company’s huge payout in the 2G spectrum auction that concluded on 13 February.

In the past month, Bharti shares have lost as much as 11% from a 30-day-high of Rs319.30 on 6 February to a low of Rs282.10 on 24 February.

The stock also suffered following an adverse ruling by a Nigerian court last month requiring Bharti to pay $3 billion to an African operator, Econet Wireless International Pty Ltd, saying it was a bonafide stakeholder in Airtel Nigeria.

The case relates to Econet’s claim that it owns 5% in Bharti’s Nigerian operations as well as the right of first refusal over the buyout from Zain. Bharti has said it will appeal the judgement.

Last week, Nigeria’s telecom regulator fined Bharti and other telcos for poor service and banned them from selling SIM cards in March. Bharti has to pay 185 million naira ($1.1 million, or around Rs6.8 crore) as fine.

“The Kenya market is only 2-3% of the total revenues for Africa. The Yu transaction was pending from 2010, when they had said they were working on the acquisition. They are following the acquisition route in some of the smaller markets in order to gain market share, in keeping with the stated goal of being number one or strong number two in all countries where they are present," a Mumbai based analyst with a multinational brokerage firm said requesting anonymity.

Shares of Bharti rose 0.38% to Rs287.60 apiece on BSE on Tuesday, while the Sensex gained 1.26% to close at 21,209.73 points.

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