This archive report was first published on 6 May 2020.
On May 6, 2020, the Competition Tribunal delivered a significant ruling for Airtel and Telkom Kenya, allowing them to sell up to 40% of their merged business.
The two companies had filed an application with the Competition Tribunal in February this year to protest the terms imposed by the Competition Authority of Kenya (CAK).
The disputed terms included:
- Retention of all workers for two years
- Prohibition on selling any assets of the resultant entity within the first five years
- Restrictions on selling four frequency spectrum licences and five operating licences, including a submarine cable landing licence
- Reversion of spectrum resources owned by Telkom to the State
However, the Tribunal dropped CAK's control over the licenses, allowing the two firms to continue trading in the permits in line with conditions imposed by the Communication Authority of Kenya (CA).
While the merged entity can offer new shares to third parties to raise fresh capital, it cannot be bought off. Additionally, the entity cannot sell sections of its business to a firm that controls more than 40% of Kenya's voice or internet market.
The Tribunal maintained the job protection clause, requiring both firms to retain at least 349 of the 674 employees. The merged entity will also retain 120 employees for two years and 114 employees by Telkom Kenya for two years after the deal.
Furthermore, 115 employees will be absorbed by the network partners of the merged entity.
