Airtel Kenya and Telkom Kenya announced that they have signed a binding agreement to merge their mobile, enterprise, and carrier services to form a single joint venture company to be named Airtel-Telkom.
The two telecommunications firms said they will seek regulatory approvals from the Competition Authority of Kenya (CAK).
A statement released by the two firms revealed that Telkom Kenya’s real estate portfolio and specific government services will not form part of the combined entity. It said “the final shareholding will be determined at the closing of the transaction. Telkom Kenya has the option of holding up to 49 percent of that shareholding”.
The companies noted that the merged company will be chaired by Telkom Kenya chief executive Mugo Kibati while Airtel Kenya chief executive Prasanta Sarma, will be appointed chief executive officer.
According to the latest data published by the Communications Authority of Kenya (CA) covering three months to September, Kenyan subsidiary of Indian telecom giant Bharti Airtel, had a market share of 22.3 percent while Telkom had nine percent. A successful deal could therefore hand them a combined share of 33.3 percent against market leader’s Safaricom’s 64.2 percent.
The companies said through the statement released that “Airtel Networks Kenya Limited (Airtel Kenya) and Telkom Kenya Limited (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”.
It was also noted that “additionally both brands: ‘Airtel’ and ‘Telkom’, as well as their respective products and solutions, will continue to co-exist”.
The two telcos noted in the statement that “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”.
Treasury Secretary, Henry Rotich, who spoke on the development, 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”.