Sources familiar with both parties have revealed that India’s telecoms giant Bharti Airtel is making a move to purchase Telkom Kenya, the East African nation’s smallest mobile operator. The move, which follows the recent Tanzania 51 percent stake give-out, is expected to create a stronger challenger to market leader Safaricom.
It is believed that London-based Helios Investment, a 60 percent stakeholder in Telkom Kenya, is looking to cash out of the investment which has spanned nearly four years. Bharti Airtel and the East African telecoms company held merger talks last year but abandoned the plan due to unknown reasons.
Bharti Airtel appears to be taking the wheel and leading talks to acquire Telkom Kenya after Helios fully cashes out. The deal, which is expected to be completed by the end of Q1 2019, will be announced by the Communications Authority of Kenya if the two operators attempt the deal.
But Mugo Kibati, Telkom’s CEO, has taken to the press to confirm that negotiations talks have been revived. But he declined to update on the discussions, with respect to Kenya’s Competition Act. Competition Authority of Kenya has to give regulatory approvals to the firm before the deal can be successful. According to the Act, parties are allowed to deliberate possible mergers and acquisitions but are mandated to notify the Authority if the deal meets the requirements provided for in the Merger Threshold Guidelines before the decision is implemented.
While the Authority considers merger applications largely based on the impact on competition and public interest, it can grant approvals unconditionally, conditionally or simply decline.
Per Communications Authority of Kenya’s recent data, Airtel has a market share of 22.3 percent while Telkom has 9 percent. Should the deal be successful, it will hand them a combined share of 33.3 percent against Safaricom’s 64.2 percent. A successful merger will also see Kenya’s second and third-largest telecom operators command 14.6 million subscribers, being 48.76 percent of Safaricom’s 29.94 million as at the business end of September.
Safaricom accounts for 8.93 billion minutes in the local voice market, while Airtel and Telkom have 4.78 billion minutes and 619 million minutes, respectively. A merger will see both have 5.6 billion minutes, closing in on their competitor’s numbers.
Image Courtesy: AFRICAN MARKETS