The sale of India's yuMobile will proceed following an agreement with Safaricom and Airtel Kenya's to absorb 175 yuMobile workers as part of the buyout deal.
YuMobile workers went to court earlier this year seeking to block the sale of the company until their fate was known.
The welfare of employees and subscribers, and how the business will be liquidated were among the issues that the Communication Authority of Kenya, the country's telecom sector regulator, considered before approving the sale.
Safaricom will take over yuMobile's infrastructure, including transmission towers and frequency spectrum, and retain 150 yuMobile staff, while Airtel will acquire 25 workers as well as yuMobile's more than 2.5 million subscribers. Safaricom CEO Bob Collymore said the joint acquisition of yuMobile will cost about $120 million, up from the previous announced $100 million buyout deal.
By acquiring the operator, both Safaricom and Airtel will consolidate their dominance of the Kenyan telecom market, Africa's third largest telecom market after Nigeria and South Africa.
The buyout could mean that small operators in Kenya will be put out of business and new operators will not enter the consolidated market, which will now have three operators instead of four. France's Orange Telecom Kenya has already said it will exit the market because of the yuMobile acquisition, saying the deal will negatively affects its growth.
"YuMobile's exiting the African market means many more small operators are expected to leave because of the stiff competition that is chewing into small operators' profit margins while the cost of operation keeps increasing," said Edith Mwale, telecom analyst at the Africa Center for ICT Development.
YuMobile entered the East African telecom market in 2008 after buying the Kenyan telecom business from Econet Wireless of Zimbabwe for $145 million.