Kenya’s two largest telecoms operators Safaricom and Airtel Kenya are snapping up embattled yuMobile for Ksh 8.6 billion ($100 million), in a deal that analysts describe as highly strategic.

This development comes after yuMobile (which also operates under the name Essar Telecom) has endured annual losses of up to Ksh 3 billion since launch of its operations in December 2008 in the East African Nation.

yuMobile managing director, Madhur Taneja, told the Sunday Nation newspaper that his company had already entered into a deal with the two operators, where Safaricom will take over yuMobile’s infrastructure and also retain 130 employees currently in the technical department.

Furthermore, as part of the deal Airtel Kenya is set to boost its market share from 17.6% to 25% by acquiring yuMobile’s 2.7 million subscribers. Subscribers on yuMobile are expected to be migrated over without changing their numbers.

Noah Mutai, an IT research lecturer and telecommunications analyst at Jomo Kenyatta University of Agriculture and Technology (JKUAT), told ITWeb Africa that the move can only be termed as strategic for all the parties involved.

“Safaricom had earlier been ranked poorly by the Communications Commission of Kenya (CCK) when it comes to network quality,” Mutai told ITWeb Africa.

“Acquiring yuMobile’s network infrastructure could not come at a better time, considering CCK had placed strict rules for the telco, before renewal of its operational license later this year.”

“Airtel on the other hand is just trying to increase its market share in the country, and getting 2.7 million customers at a go can be termed as a great achievement,” Mutai added.

Mutai was however quick to add that with the deal finalised, Orange, the current smallest player in the market with a 7.1 market share according to CCK, will be in a ‘tightening-noose’ situation, as more pressure builds.

“The signing of that deal will see a ripple effect in Orange’s strategic plans, as it essentially means its two major rivals had suddenly grown bigger and stronger, something that could affect its growth plans in the long run,” Mutai concluded.

According to statistics from the CCK, Kenya has 31.3 million mobile subscribers, making among the most active telecom markets in Africa.