Telkom-Airtel Kenya Merger May Render Competition Report Obsolete

Telkom Kenya Plaza

Telkom Kenya PlazaWhile telcos Airtel and Telkom Kenya are yet to make formal announcements about a possible merge, credible sources continue to hint that the acquisition is pretty much alive. Activities regarding the development were communicated as early as April 2018, and although Airtel did try to abandon the takeover, the Indian-owned carrier appears to have rolled back on track after its Chairman flew into the country to pursue a meeting with Telkom executives.

According to Safaricom CEO Bob Collymore who spoke to Reuters, the telco will welcome the merger should it be completed successfully following media reports that Telkom will be under the Airtel umbrella.

Safaricom’s market share has been shrinking (from 71 percent in April 2018 to 64 percent in September 2018) as Telkom and Airtel’s grew. The second and third largest operators now command 31% market share (Telkom and Airtel command 9 percent and 22 percent market share, respectively), which Mr Collymore refers to as a good thing because it will create an entity with sufficient critical mass that will make it operate sensibly.

Telkom and Airtel have for a long time pressured the Communications Authority of Kenya (CA) to compel Safaricom to share its transmission sites with them. Also, Safaricom, which has since slashed fees for T-Kash/M-PESA transactions, is still being asked to share its mobile money agency network to others in order to bolster fair competition. Perhaps the biggest concern is CA’s sluggishness in enforcing Analysys Mason’s recommendations that entailed the need for Safaricom to present invariable loyalty schemes, standard tariffs, and promotions that can be reproduced by others.

Kenya’s Parliament Departmental Committee on ICT is also examining the findings of the Mason report, which may or may not declare Safaricom a dominant player. However, should the merger go live before CA and Parliament finalize their findings, then the report could be rendered unnecessary because the metrics used to study the market will no longer relevant.