Kenya’s communication authority gives new conditions for Airtel-Telkom merger approval

KENYA – Mobile telecoms regulator, Communication Authority of Kenya (CAK) has spelled out new conditions that Telkom Kenya and Airtel Kenya must meet before their merger is approved.

Central to CAK’s authorization is the barring of the soon to be merged entity- Airtel Telkom from entering any other sale transactions in the next five years.

The condition essentially blocks the pair from making any further market consolidation efforts to largely see Safaricom retain its market leader position.

The CAK further directed that Telkom reverse its 900 megahertz (MHz) and 1800MHz back to the government upon the expiry of license term.

Airtel and Telkom are also expected to honor all their existing contractual terms with government entities even as the CAK expects the pair to miss out on any preferential treatment in their access of shared telecommunications infrastructure.

At the same time, the duo is expected to retain at least 349 staff from the current pool of 674 with Telkom being ordered to keep a minimum 114 members of its staff.

In a statement Telkom said it remains engaged with all regulators on the capture of requisite approvals to the proposed merger.

“We are continuing to engage all the regulators as well as other critical stakeholders in the transaction process to facilitate receipt of requisite approval and appropriate conditions required to progress the funding,” read part of the statement.

The imminent merger of the two minority players in Kenya’s telecommunication industry poses a great threat to the dominant player, Safaricom Plc.

Latest data from the CA as of June 2019 for instance shows Safaricom’s market share at 63.5 percent or an equivalent 31.8 million customers to mirror a drop in the subscriptions share from 65.4 percent in a similar review period in the last year.

Five years ago, Safaricom held an even larger share of 68 percent but has seen this scope narrow as Airtel-Telkom gains to 32.7 percent or an equivalent 17.4 million customers as at the end of June 2019.

Mergers are not in in Kenya’s telecoms sector. Market leader Safaricom, relaunched in the early 2000s’ as a partnership between the United Kingdom based Vodafone and the then Telkom Kenya, is testimony to the potential of mergers in disrupting the status quo in the industry.

The government of Kenya owns a notable share of 35 and 40 percent in Safaricom and Telkom respectively.

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