Telkom Kenya and Airtel Kenya have signed a binding agreement that will see the shareholders of the two companies enter into an agreement to merge their respective Mobile, Enterprise and Carrier Services businesses in Kenya to operate under a joint venture company to be named Airtel-Telkom.
Telkom Kenya real estate portfolio and specific government services will not form part of the combined entity. The final shareholding will be determined at the closing of the transaction. Telkom Kenya has the option of holding up to 49 per cent of that shareholding.
The merged company will be chaired by Telkom Kenya CEO Mugo Kibati while Airtel Kenya CEO Prasanta Sarma, will be appointed the CEO of the new telco.
The finalisation and closure of the transaction is subject to approval by the relevant authorities.
Airtel Kenya and Telkom Kenya will see no immediate changes to their operations which will continue as usual. Similarly, there will also be no change to the current respective leadership and management, legal, organisational and staffing structures. Additionally, both brands: ‘Airtel’ and ‘Telkom’, as well as their respective products and solutions, will continue to co-exist. Similarly, service delivery to the respective companies’ customers as well as engagement with all business partners of both companies will continue to operate as usual.
As per the agreement, both the partners will combine their operations in Kenya and establish an entity with enhanced scale and efficiency, larger distribution network and strategic brand presence, thereby enhancing the range and quality of products and service offerings in the market, and greater choice and convenience to the consumer.
The combined entity will see sustained investments in networks to further accelerate roll out of future technologies. The Enterprise and Carrier Services businesses will get a boost with a larger fibre footprint and increased number of enterprise customers – including both large corporations and SMEs who would have access to a diverse portfolio of world-class solutions.
Commenting on the agreement, National Treasury CS Henry Rotich said: “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.”
ICT CS Joe Mucheru commented: “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 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.”
Telkom Kenya is 60 per cent owned by Helios Investment Partners, with the remaining stake held by the Kenya government.
Aitel Kenya is owned by Bharti Airtel, an India-based firm with operations in 18 countries across Asia and Africa.
According to the latest industry stats from Communications Commission of Kenya (CA) covering the period between April to June this year, the number of mobile subscriptions in the country stood at 45.5 million up from 44.1 million reported in March 2018. Safaricom had 29.6 million users, Airtel Kenya had 8.7 million while Telkom Kenya was a distant third with 3.8 million subscribers. Fourth was Finserve Africa’s Equitel brand which had 1.94 million users.
By joining ranks, the combined entity to be known as Airtel-Telkom will now have 12.5 million customers to serve.