For more than a year, rumours have been doing rounds that Telkom and Airtel were planning to merge their businesses in the process of augmenting their product and service offerings to match the services of Safaricom. Safaricom had also been mentioned in the competition clause by both Telkom and Airtel that highlighted their inability to grow based on Safaricom’s lion’s share of the local mobile operator business. A report that investigated the claims is yet to be fully examined by the Communications Authority of Kenya (CA) and parliament, and we expect Parliament and the CA will explore the report for a concrete recommendation.
Telkom Kenya and Airtel Kenya have now officially made public the commencement of merger plans. The binding agreement was signed sometime today, implying that the two carriers have agreed to merge their mobile, carrier and enterprise services.
The two carriers will operate under a single entity named Airtel-Telkom if and when regulatory approvals allow.
It is also worth noting that the Telkom’s real estate portfolio and unnamed government services will not be part of the combined deal. What’s more, the final shareholding will be discussed and revealed at a later date.
Telkom will also have the option to hold up to 49 percent of the shareholding.
The merger is, of course, subject to approval by relevant authorities.
Positions
Telkom’s current CEO Mugo Kibati will serve as the Chairman of the entity to be formed. On the other hand, Airtel Kenya’s Chief Executive Prasanta Sarma will have his hat bumped up to CEO of Airtel-Telkom.
Operations
At the moment, both carriers will see no immediate change in their mode of operation. Also, there will be no changes or reshuffles in the current leadership in terms of management, legal, staffing and organizational structures.
Both ‘Airtel’ and ‘Telkom’ will continue to offer their products and services normally.
“This move is well aligned with the government’s agenda to optimise the value of the assets that it holds in trust, on behalf of Kenyans, while cementing the country’s position not only as a regional business hub but also as an international investment magnet,” noted National Treasury Cabinet Secretary, Mr. Henry Rotich.
“ICTs remain a vital link to achieving Kenya’s economic goals and our national development agenda, particularly with respect to service delivery. Such mergers have had a positive impact on the development of the sector and service levels to consumers in other markets. Similarly, we look forward to this merger leading to the introduction of new technologies and telecommunication products which will, in turn, support the growth of other business sectors of our economy, thereby spurring national production to meet the growing demand locally and beyond,” added ICT CS Joe Mucheru.
