Telkom Kenya and Airtel Networks have announced that they have dropped their planned merger talks, which have been ongoing for some time now.
“After carefully reviewing the available options, Telkom has opted to adopt an alternative strategic direction and will no longer be pursuing the proposed joint venture transaction. This decision has been mutually agreed with Airtel Networks Kenya Limited,” it said on the press release.
Telkom says that the challenges experienced in getting approvals required to complete the transaction led it to evaluate alternative strategic options.
The company has also seen new opportunities that have been brought by the COVID-19 pandemic. “Our confidence in Telkom’s new direction is further bolstered by the accelerated digital transformation brought about by the recent dynamics of the COVID-19 pandemic, that has made both businesses as well individuals, acutely aware of the need to review direction, with respect to how we do things, and the need to step-up. This accelerated digital transformation is particularly important within the telecommunications sector, owing to an increased demand for data and broadband,” they said in the post.
Thanks to the mutual decision to not pursue the proposed merger, Telkom says that the notice of redundancy issued by the company on 31st July 2019 has been withdrawn and the earlier envisaged redundancies no longer apply. The Competition Authority of Kenya had stipulated that the merged entity shall ensure that at least 349 out of the 674 employees are retained, which meant a huge potion of people would have been declared redundant.
Telkom now says they are now focusing on bettering their position on their infrastructure asset base and services and to support the digitization act and connecting the unconnected like their partnership with Google Loon.
The proposed merger of Telkom and Airtel met with a lot of challenges. The Communications Authority of Kenya stopped it following the graft agency (EACC) investigations in August last year. The Competition Authority of Kenya finally approved the merger in December last year where they added specific conditions that they should fulfil. Telkom this year took the graft agency to court for interfering with the Airtel merger.