This archive report was first published on 4 September 2019.
On February 8, 2019, Telkom Kenya Limited and Airtel Networks Kenya Limited announced their intention to merge their businesses in Kenya, forming Airtel-Telkom.
The combined entity aimed to invest more in their joint network, accelerate the rollout of future technologies, and benefit from a larger fibre footprint and diverse portfolio of world-class solutions.
However, the merger has been delayed due to Safaricom's opposition, which has raised concerns over debt and spectrum imbalance.
Telkom Kenya CEO Mugo Kibati stated, “The intended merger of some of our businesses with Airtel, will result in the formation of an entity with enhanced scale that will enable Kenya’s sector have one last stab at a competitive environment, despite the tough forces at play.”
He added, “We have no quarrel at all with our colleagues at Safaricom, we are simply trying to restructure and improve our own business and for the good of the industry. It is unfortunate, however, that Safaricom now wants to delay this process that seeks provide customers with more credible options. Does the dominant player not want to see this sector grow? Is the Dominant player wary of competition, and even more precisely, wary of competitive pricing, choice and value for money for the consumer?”
On August 30, 2019, Safaricom informed the media that it had written to the Communications Authority, urging the regulator not to approve the intended merger of businesses, citing concerns over debt and spectrum imbalance.
Safaricom claimed that Telkom owes it Ksh 906.6 million and Airtel owes it Ksh 390.7 million for interconnection, co-location, and fibre services.
Additionally, Safaricom expressed concerns over the imbalance in the spectrum, stating that the combined bandwidth of Telkom and Airtel would be 77.5 percent for 17.3 million subscribers, compared to Safaricom's 57.5 percent spectrum for 31.8 million subscribers.
On August 14, 2019, the Ethics and Anti-Corruption Commission (EACC) wrote to Telkom Kenya in connection with investigations on allegations of misappropriation of Public funds in the process of the recapitalization and restructuring of the balance sheet of Telkom Kenya Limited, in 2012.
As a result, the regulatory bodies have put a pause on the approval process, impacting the progress of the intended transaction.
Telkom Kenya CEO Mugo Kibati called for the regulatory bodies to move with speed, warning that further delays could lead to a monopoly in the telco sector, negatively impacting the welfare of the consumer and the economy.
