Indian operators battle it out in Kenya
- Published on 18 July 2012
Two Indian mobile operators in Kenya, Essar Telecom (Yu) and Airtel Kenya, have taken their battle for customers to court, claiming hundreds of millions from each other in a network dispute.
Court papers show that in April, 2009 Airtel leased cell-tower sites to Yu.
However, Yu claims that its customers’ ability to make calls, send text messages and use data services were affected after frequent failures on Airtel cell-tower sites. And as a result Yu is claiming $22 million in damages from Airtel.
Yu also claims that Airtel's failure to provide daily security on network sites as agreed caused the loss of 34 batteries.
Meanwhile, Airtel is claiming $2.9 million from Yu for non-payment.
"Yu Telecom has filed a suit against Airtel Kenya in regard to enforcement of certain terms and conditions of the site lease agreement between the two parties. The matter is currently sub-judice and we would not like to comment anything further," Madhur Taneja, chief executive officier of Essar Telecom Kenya told The Economic Times.
Yu has however managed to get an injunction restraining Airtel from switching off its connectivity or interfering with the company’s equipment at Airtel’s sites.
Yu further wants to refer the matter to arbitration. The case will proceed on July 20 before High Court judge Daniel Musinga.
Challenges of sharing infrastructure
The multi-billion shilling case brings to light the challenges telecoms competing against each other face even as the Kenyan government pushes for the sharing of infrastructure to reduce electronic-waste and costs.
Both Yu and Airtel play catch up to Safaricom, which holds the biggest share in the competitive telecommunications market . Though Yu's promotional and special offers targeting the youth helped it increase its market share to 8.7%, it still trails behind Safaricom, Airtel and Telkom Orange.
The strategy of Airtel and Yu to offer the lowest calling rates, and at times free calls, has failed to have much impact on their revenue numbers as they both struggle to break even with other operators shifting from voice to data and other value added services for revenues.
Yu's management has vehemently denied reports that its parent company Essar Group is mulling an exit from the highly competitive Kenyan market.
“Essar Group has invested over $500 million into Essar Telecom Kenya and continues to be actively involved in its operations. As you may have already seen from the latest CCK report, yu was the fastest growing mobile service operator … Essar Telecom Kenya is, and continues to be, part of Essar Group,” said Taneja.