When it is not addressing issues surrounding the appointment of its next Director-General, the Communications Authority of Kenya (CA) is tasked with policing the ICT sector in the state. This time around, the Authority has suspended the merger between Telkom and Airtel Kenya. The companies’ major stakes are owned by India’s Bharti Airtel for its arm in the country, and UK-based Helios Investment that commands 60 percent ownership of Telkom, with the rest being at the hands of the Government.
The CA’s directive is motivated by anti-corruption investigations that have since come up regarding how the merger exercise was developed. According to Business Daily, there is also another investigation that seeks to establish the details of process that saw Treasury transfer its ownership to Orange, which later sold its ownership to Helios – a development that saw the carrier reclaim its ‘Telkom Kenya’ moniker from Orange.
A few weeks ago, the CA announced its plan to give the merger a go-ahead after allegedly verifying the details of the plan to streamline the operations of the two carriers into a single operator named Airtel-Telkom. The goal was and still is to form a collaborative approach to pushing the reach of their mobile and enterprise products and services to as many Kenyans as possible to compete with Safaricom that is the undisputed market leader. The merger deal, which was announced in early 2019, was, therefore, a done deal until a series of issues started coming up.
To begin with, a section of former Airtel employees moved to court to block the development. Airtel, which had since laid them off, would, according to the fired workers make things more challenging for them to access to a KES 1 billion package that should cover for their ‘wrongful’ sacking. Subsequent issues include the aforementioned transaction between Treasury and Orange, as well as EACC’s investigation.
Telkom Kenya will also see 575 of its employees leave the organization at the end of the month after the telco announced the operation realignments a couple of days ago. The exit of the employees is based on the success of the merger, after which part of the ejected employees will have a soft landing by reapplying for new positions in the new company. Of course, it is likely the exercise will be postponed too.
Telkom says it has furnished the EACC with relevant documents for the investigations, which will take some time to establish if public funds were misused when the Ministry of Finance’s loans to the operator were converted to equity.