yuMobile CEO’s Ksh144 million Annual Bonus Payout, Tax Evasion and Other Details

BY now you know that yuMobile, owned by India’s Essar, is being sold to Safaricom and Airtel Kenya. The deal is not yet penned as Safaricom and Airtel are still in disagreement with yuMobile on the modalities.

Employees of yuMobile have gone to court to block the sale until their interest is catered for. They are demanding more than Ksh 1.2 billion  in severance pay before the sale of Essar Telecom Kenya (ETKL) is concluded.  Safaricom looks to buy the infrastructure arm of yuMobile while Airtel Kenya will acquire its numbering prefix and the over 2.7 million subscribers.

yuMobile has around 235 employees but there is massive exit with the impending sale. Safaricom is set to absorb while Airtel will take only 20 employees.

Safaricom has offered $80 million (Ksh6.8 billion) for infrastructure while Airtel Kenya is set to pay $37.2 (Ksh 3.1 billion) million for the residual infrastructure, numbering prefix and subscribers. It is not clear how the assets and liabilities of ETKL or yuMobile will be handled but Airtel Kenya is demanding to retain up to $15 million (Ksh1.2 billion) to offset the over $7.2 million which yuMobile owes it in infrastructure share costs. Airtel Kenya has threatened not to clear their obligations if yuMobile will not allow it to retain the $15 million it is demanding.

yuMobile CEO’s pay

yuMobile like Airtel Kenya is mainly managed by Indian expatriates with the CEO , CFO, CS, MO and CTO being Indian. The only local function heads are HRD, FC, Legal Head, CS Head and CIO. Key roles of sales and marketing have always been headed by expatriate Indians with little knowledge of Kenyan market culture. yuMobile has not performed so well in the market despite balooning its not so valued subscriber base. Essar even brought in Indians to handle junior positions in sales and marketing completely ignoring the country’s labour laws. Kenyan labour regulations demands that positions like marketing be held by Kenyans.

The strategy of looking down upon Kenyans has failed Airtel Kenya and KDN the latter even had to beg the locals back to its fold after recent acquisition by Liquid Telecom. Vodafone through Safaricom has always ensured that it uses mostly local human resource for key position thus ensuring that its message and engagement with the local subscribers is localised with personalised marketing messages to win clients over.

CEO’s bonus pay

What might be of interest to auditors of yuMobile operations is how much the CEO and top expatriates took home as bonus packages despite the company performing so poorly. yuMobile CEO Madhur Taneja paid himself a massive Ksh 78 Million in one instance despite severally paying himself money amounting to over $1.3 million in the last one year.  Essar Kenya is reported to have well prepared its expatriate employees in Kenya for the sale while not doing the same for its local employees. The expatriates have been awarded very interesting dismissal packages. With the CEO alone having earned himself almost $1.3 million in the impending sale, it is not clear why the company is refusing to pay the local employees just $12 million which they are demanding in severance pay.

Bonus pay of other expatriates

The company has been making average annual loss of $25 million. The company is also not making other details of the transaction clear to the regular with reports out that details of residual asset acquisition by Airtel Kenya is masked that the regulator and Treasury will find it hard to track any tax payable to the government in case the competition authority will approve the deal.