Airtel-Telkom merger runs into more storm as MPs reject plan

By , K24 Digital
On Wed, 24 Jul, 2019 00:00 | 2 mins read
Airtel-Telkom merger.
Mercy Mwai @wangumarci

Members of the National Assembly want the proposed merger of Telkom Kenya and Airtel Networks Kenya Ltd stopped until all issues have been addressed.

In a letter to the Communications Authority of Kenya (CA), the Committee on Implementation has told the authority to halt any plans to have the merger until they discuss the issues currently under investigations.

The committee chaired by Narok North MP Moitalel Ole Kenta was categorical that the merger is unacceptable as Telkom’s privatisation has been previously questioned by another House Committee.

He said there is no way such a merger can proceed yet all issues touching on privatisation and restructuring of the company are yet to be concluded as Parliament was still considering the matter.

He said: “The merger of Telkom Kenya and Airtel is not acceptable. The country cannot afford to lose billions through dubious transactions.”

Kenta made the remarks on the day that the committee summoned ICT Cabinet Secretary Joe Mucheru to appear before it to shed light as to why the merger process is going on despite Telkom’s privatisation being questioned, after he previously snubbed the committee’s invitation.

At a committee meeting yesterday, Kenta said that if Mucheru fails to honour the summons, he will be a subject of sanction by a resolution of the House for openly showing defiance against the institution of Parliament that allocates and oversights the usage of funds by his ministry.

“What he is trying to do is to undermine the authority of Parliament, laugh at us, especially, when he fails to honour our invitations and we do nothing, and undermining the recovery of billions invested in Telkom,” he said.

Other MPs Simba Arati (Dagoreti North) and Godfrey Osotsi (nominated) said it was wrong for Mucheru to continue snubbing the committee yet it has sent formal invitations to him.

The move by the MPs comes after CA Director General Francis Wangusi gazetted on  July 12 the government’s intention to merge Telkom with Airtel. 

The notice says the merger is in exchange for Telkom Kenya gaining a shareholding in Airtel for the purpose of creating an integrated telecommunications company with mobile, enterprise and wholesale divisions.

Wangusi said the parties have indicated that upon the approval of the proposed merger, Airtel will be renamed Airtel-Telkom, while Telkom will continue operating in the ICT sector- providing certain other services to select customers.

Carrier business

Reads the gazette notice: “The applicants have made an application to the CA of their intent to combine their telecommunication businesses in Kenya through the transfer of Telkom Kenya’s mobile, enterprise and carrier business to Airtel Networks Kenya Ltd.”

Following the move the two telcos went ahead and signed an agreement to merge their businesses and operate as Airtel-Telkom. 

Telkom Kenya is currently majority owned by private equity firm Helios Investment Partners (60 per cent) while the Government of Kenya holds the remaining 40 percent stake.

The proposed merger will give Airtel-Telkom, as the merged outfit will be known, more bargaining power in the country’s cellular mobile services market currently dominated by Safaricom. 

As of end of March this year, Safaricom had a market share of 62.4 per cent mobile subscriptions, Airtel 26.1 per cent, while Telkom had 7.1 per cent, according to the Communications Authority of Kenya 2018/2019 third quarter sectoral report.

Going by these figures, Airtel- Telkom will control 34 per cent of the country’s cellular mobile services market. The merged entity will have about 4.1 million subscribers on its mobile money transfer platforms, a segment also dominated by Safaricom. – Additional reporting by Lewis Njoka

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