Airtel and Telkom Merger in the Offing

Kenya’s second and third largest telcos Airtel and Telkom have announced the signing of a binding agreement that will see the two companies merge their respective mobile, enterprise and carrier services businesses in Kenya. They will operate under a joint venture company to be named Airtel-Telkom.

Telkom Kenya’s real estate portfolio and specific government services will not form part of the combined entity with the final shareholding being determined at the closing of the transaction.

Telkom Kenya has the option of holding up to 49% of that shareholding. The merged company will be chaired by Telkom Kenya‘s CEO,  Mugo Kibati,  while his counterpart at Airtel, Prasanta Sarma will become the CEO.

Approval

Finalization and closure of the transaction is subject to approval by the relevant authorities.

However, there will be no immediate changes and all operations of Aitel Kenya and Telkom Kenya will continue as usual.

Service delivery to the respective companies’ customers as well as engagement with all their business partners will continue to operate as usual.

As per the agreement, both 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.

This means that Airtel-Telkom will boast of 31.3% of the market share (Airtel 22.3%, Telkom 9.0%) trailing Safaricom whose subscriber base accounts for 54.2% of the entire market.

Further, the joint company will have enough subscribers and the necessary infrastructure to take on Safaricom.

Telkom, which is 60 percent owned by London-based Helios Investment, accounted for 9 percent of Kenya’s mobile telecom subscribers in September 2018, behind second-placed Airtel, which had a 22.3 percent market share.  The Kenyan government owns the rest of Telkom’s shares.