Essar explores Africa partnership with Warid Telecom

An investment by the Essar Group into the telecommunications portfolio of the Dhabi Group's African assets is the subject of what the two entities are calling exclusive discussions.

The transaction, which would be overseen by Standard Chartered Bank on the Dhabi side, will involve an equity infusion into the telecom businesses and will be the basis of a partnership to create a significant presence in Africa.

Through its Warid Telecom subsidiary, the Dhabi Group owns mobile networks in Pakistan, Bangladesh, Congo, Uganda and Cote d'Ivoire. Essar's telecom unit built one of India's largest mobile networks, which it now owns in a joint venture with the Vodafone Group of the U.K.

Both companies have built, launched and operated telecom networks in emerging markets and the partnership is intended to capitalize on shared opportunities, according to a press statement issued by Warid Telecom Uganda.

Launched in February 2008 following a US$250 million investment in the Uganda entity, Warid has gone on to become a major player in the Uganda market.

Today, Warid Telecom, which offers users the cheapest calling options available in Uganda's highly competitive mobile telephone market, signed up 1.5 million subscribers in less than 24 months.

The company has used a strategy that offers users close to free calls. Its latest service offers customers unlimited on-network calls for the entire day for a cost of half a U.S. dollar.

In December last year, the company launched the Internet segment of the business after spending some $10 million on a new 8-meter satellite and WiMax devices that are supplied by Motorola.

Warid Telecom is continuing to look for new licenses in Africa and it is believed any cash injection by Essar will go toward increasing its presence on the continent -- the world's fastest growing mobile phone market.

The Dhabi Group and its chairman, Sheikh Nahayan Mabarak Al Nahayan, lead a consortium of investors composed of private equity and family businesses in the Africa Middle East region, according to the release.

Dhabi Group has diversified business interests with a focus on emerging market opportunities in financial services, telecommunications and real estate. Dhabi Group and its consortia have banking interests in Asia. Its portfolio was expanded in 2005 to include telecommunications services in Asia and Africa.

Essar has significant interests in telecom services, spanning mobile telephony, telecom tower infrastructure, telecom retail and IT-enabled services.

Essar holds a 33 percent interest in Vodafone Essar, which is a joint venture with the Vodafone Group. It is one of India's largest cellular service providers, with over 75 million subscribers.

Recently, the group launched Essar Telecom Kenya as that country's fourth mobile cellular network operator under the Yu brand.

In its home market of India, Essar is known for what is called "the Mobile Store," a pioneering telecom retail initiative that is India's largest national retail chain of mobile phone stores with over 1,300 outlets spread across 200 cities.