FEATURED STORY

Airtel develops cold feet in Telkom merger talks

Share
Airtel moves to build on market share gain with tantalizing festive period offers
Share

Airtel Kenya has apparently developed cold feet and walked away from negotiations to merge with Telkom Kenya in a move that was intended to forge a competitive force to challenge leading operator Safaricom, Reuters reported on Monday.

Citing government and industry sources, the international news agency said the proposed merger encountered a number of barriers, a significant one being Airtel’s reluctance to commit to future investments in Telkom. “Airtel developed cold feet,” the Reuters industry source is quoted.

The report further states that Information, Communication and Technology Cabinet Secretary Joe Mucheru was aware of the Airtel walkout even though telco regulator Communications Authority of Kenya (CA) had yet to receive any formal communication regarding the proposed merger from either Airtel or Telkom.

Neither of the telecommunication providers responded to efforts from Reuters to seek comment on the report.

In early April, reports had emerged of the possible merger between the two telecommunications providers so as to take on giant telco outfit Safaricom which boasts a 71.9% market share domination of the industry.

With finer details of the deal still remaining scant, initial reports had indicated that the negotiations which had reached an advanced stage could have seen Telkom acquire all of Airtel’s assets.

At the time, a source at CA had told Reuters news agency the two firms had been engaging officials over the plan to share outlets and infrastructure like transmission assets, before Telkom acquires Airtel Kenya at an unspecified time.

“They are yet to make a formal application (to the telecoms regulator) disclosing all the details,” the source had told Reuters.

Industry executives at the time had said that if the deal went through, both firms would make significant savings and acquire the scale to compete effectively with Safaricom. “This is a cold, calculated business strategy,” a telecoms executive who did not wish to be named had said at the time.

The sector has been difficult to manoeuvre for small players with Yu Mobile being forced to cease operations in 2014, selling off its assets and subscribers to its competitors, Airtel and Safaricom for around US$100 million from its parent company, the Indian group Essar.

Airtel – which is owned by Indian giant telco Bhati Airtel – is said to have significantly increased its subscriber base during the final quarter of last year. This has partly been attributed to the opposition calling for a boycott of Safaricom following the disputed electioneering period in the country.

READ: A NEW PARADISE FOR COIN COLLECTORS

Telkom on the other hand has seen the government – which has a 40% stake in the company – try to revive the struggling telco including the sale to French firm Orange in 2007 that proved unsuccesful.

Last month, Telkom – which is owned by London-based Helios Investments – announced the sale of 723 of its towers to American Tower Corporation in a move seen as part of asset-stripping by its owners, one local newspaper has reported.

Telkom and Airtel have a combined 23% of Kenya’s 41 million mobile subscribers.

Written by
Mike Njoroge -

Mike Njoroge is the founder of Daystar Oracle and FootballTriangle. He is passionate about news, religion and sports. He can be reached at: [email protected]

2 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Follow Us

Related Articles
Milka Moraa with Affordable Housing Board officials
FEATURED STORY

Milkah Moraa, Woman Humiliated By City Pastor, To Get Affordable Housing Unit

Milka Moraa Tegisi,  a woman from Mukuru kwa Njenga slums who was...

Kenya Airways repair accreditation
FEATURED STORY

Kenya Airways to Service European Planes After Key Certification

Kenya Airways (KQ) has attained another milestone with the European Union Aviation...

Affordable Housing Project in Bomet
FEATURED STORY

How Affordable Housing Project In My Town Transformed My Life: Beneficiaries Tell Their Stories

The story of John Kipkorir, a 39-year-old renowned welder in Bomet town,...

KCB Platinum Multi-Currency Card
FEATURED STORY

KCB, Mastercard Unveil Kenya’s First Prepaid Card Supporting 11 Currencies

KCB Bank Kenya, in collaboration with Mastercard, has launched Kenya's only multi-currency...