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Warid’s Essar plans to invest US$2 billion

By Independent Team

The Indian telecom giant, Essar Group which owns Warid Uganda, has prepared a telecom blueprint for Africa under which it would invest US$2 billion

According to Standard Business of India, Essar’s goal is to get 20 million customers and more, spanning six to seven countries in the region. ‘It sees huge potential in investing in Africa, which has a mobile customer base of 200 million.’

The news is not confirmed and Standard Business, which is often accurate on such matters, attributed the news to an anonymous source.

It also quoted an Ernst & Young report that showed that the African wireless telecom market grew 49.3 percent (compounded annual growth rate) between 2002 and 2007. The average mobile penetration for the continent is 37 per cent, expected to rise to 61 per cent by 2012.

Under Essar Communication Holdings, the Essar Group has a 49 per cent stake in Econet Wireless, which in turn has 70 per cent stake in its Kenyan subsidiary.

The partnership between Essar and Econet has launched the ‘Yu’ network and has a million subscribers in the country. Essar also has a majority stake in Dhabi Groupâ’s Warid Telecom operations in Uganda and Congo.

Indian companies in the past have failed in trying to cut big-ticket deals with South African companies.

In September last year, Bharti Airtel had to call off a complex share swap deal with MTN after the government in South Africa rejected the merger structure. Anil Ambani’s Reliance Communications’ deal with MTN also ended abruptly, after RIL said it had the first right of refusal for any stock sale.

Essar has a presence in the telecom business in India under the Vodafone Essar partnership, where it has a 33 per cent stake. Vodafone Essar is the second largest mobile operator in the country. Essar also has a 9.99 per cent stake in Loop Mobile, which operates in the Mumbai circle.

The South African telecom market is an emerging one. ‘Though we have no pricing pressure there like in India, the cost structure in that market is different. Therefore, we might end up making just as much margin as we do in India,’ the source said.

Essar Group is also in talks with the government of South Africa to set up a power plant in the country. It also plans to invest over $2 billion (Rs 9,270 crore) to have a pan-African mobile operation in six-seven countries in the region.

‘South Africa has no dearth of coal reserves, but lack of regulation is a problem. We are in talks for a presence in the power sector,’said a top source in Essar. South Africa is known for its huge power deficit, ensuring demand for new projects in the sector. Raising debt could be difficult in the country, though there is a lending channel open through foreign banks present in Africa.

The source said it would be difficult to go for the standard 70:30 debt-equity structure which is popular in India. Not revealing the size of the project, he said Essar was looking for only big projects and the company might need to set aside more equity for it.

In Africa, the group is into oil and gas, too. It has three onshore assets in Madagascar and an offshore block in Nigeria. It also has a 50 per cent stake in Kenya Petroleum Refineries, which operates an 80,000 barrels per day refinery in Mombasa.

MTN orders upgrade of its Voice SMS

MTN Uganda has seen an impressive adoption of the newly launched Voice SMS service by its subscribers and has ordered an upgrade to triple the capacity of its system.

According to a press release from Kirusa, the providers of the technology, MTN Uganda Voice SMS service has seen adoption by over 11% of its subscribers within three months of the launch of Voice SMS on their network.

Voice SMS allows the subscribers to send messages by voice, eliminating the need to type. It enables the subscribers to communicate faster, with greater ease, and convey emotions as compared to limitations of text messages. Use of Voice SMS by mobile subscribers is gaining global relevance for its benefits in surpassing the limitations of text messages.

MTN launched Voice SMS service across Uganda based on Voice SMS technology from Kirusa.

According to Kirusa, the Voice SMS adoption figure in the first month of launch was around 8% and the usage was around four Voice SMS compose calls per user, which was an excellent start. By the second month, the adoption had increased to 11%. Moving forward, MTN has been experiencing significant retention for Voice SMS service, with 75% of total users being existing users.

Isaac Nsereko, Chief Marketing Officer of MTN Uganda, is said to be delighted with the support from the Kirusa team in achieving this success.

 

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