UPDATE: Telkom Kenya has admitted exploring conversations as it looks forward to offering customers the best value and superior experience.
“It is common practice within the ICT industry to conduct exploratory conversations; to assess the market for areas of synergy, cooperation and partnership, with the intent of giving customers greater value and superior experience.
As has been our practice, we will continue to communicate significant developments in a timely manner, as we execute our business strategy.”
It appears that Kenya’s second and third largest telecom operators Airtel and Telkom are back to pursuing a merger that was hinted sometime in April 2018. This latest development, which is said to go into effect in the coming months, was revealed by KahawaTungu that announced the presence of Bharti Airtel’s Chairman Sunil Mittal in the country. According to reports, Sunil held a series of meetings with Telkom Kenya’s board that was also attended by CS for ICT Joe Mucheru.
It should be noted the two carriers have their fair share of merits and issues, and while their relentless push for growth cannot be questioned, it is obvious they cannot challenge Safaricom in their current states.
According to the first announcement of the merger, it was reported that Telkom was planning to acquire Airtel Kenya’s assets and retain the Telkom name. However, it has emerged that the reverse could happen, where Airtel will take over Telkom Kenya with a 50 percent stake, 40 percent for Helios (Telkom) and 10 percent for the government of Kenya.
Telkom and Airtel have a combined percent of 31.3% versus 64.3% held by Safaricom as of September 2018. The numbers represent a notable drop in Safaricom’s market share as the other two operators grew. However, the disparity in revenue is more extensive, with Safaricom raking in billions from voice, data, and M-PESA.
The Communications Authority of Kenya (CA), which manages the ICT sector in the country, is yet to give concrete guidelines about the competition clause pushed by Airtel and Telkom. The two operators have in the past reported their inability to compete fairly, and called for the CA to declare Safaricom’s dominance in the market.
Should the merger succeed, then the two telcos will have sufficient resources and the chance of competing with Safaricom, a move which may also be supported by the recommendations brought forth by Analysys Mason about the state of the telco market in Kenya. The proposals, which leans on sharing of infrastructure with small operators, will be effected after examination by Parliament.