Telkom hits back at Safaricom bid to stop its merger with Airtel

Telkom Kenya Chief Executive Mugo Kibati with Chief Corporate Affairs Officer Clare Ruto at a press briefing on the proposed merger of the telco with Airtel Kenya in Nairobi yesterday. [Wilbeforce Okwiri, Standard]
Telkom Kenya yesterday dismissed Safaricom’s attempt to stop its proposed merger with Airtel Kenya, saying the telco has no grounds to do so.

Managing Director Mugo Kibati said the request by Safaricom to the industry regulator to halt the ongoing merger transaction threatens to erode the gains realised from the liberalisation of the telecoms market.

“We have no quarrel at all with our colleagues at Safaricom. We are simply trying to restructure and improve our own business and for the good of the industry,” said Mr Kibati at a press briefing in Nairobi yesterday.

“It is unfortunate, however, that Safaricom now wants to delay this process that seeks to provide customers with more credible options. Does the dominant player not want to see this sector grow? Is the dominant player wary of competition, and even more precisely, wary of competitive pricing, choice and value for money for the consumer?”  

Last week, Safaricom Chief Executive Michael Joseph said the company had written to industry regulator Communications Authority of Kenya (CA) seeking to halt the merger between Telkom and Airtel.

“We are aware that our competitors are having discussions on merging their operations, and we have written to the regulator voicing our concerns about the merger,” said Mr Michael Joseph during the company’s annual general meeting last Friday.

“We cannot reveal what the concerns are at this point because it is between us and the regulator,” he said when asked to expound on the issues.

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Telkom’s Kibati said yesterday the merger is the only way to sustain the business, establish competitive pricing and innovation in the telecoms sector.

“Further delay to the approval of this proposed transaction could find Kenya staring at the potential reversion of the telco sector into a monopoly,” he said.

“A dominant player not only poses a systemic risk, price increase, innovation inertia and a stunted market owing to the lack of competition but ultimately leaves the consumer without choice.” In February this year, Telkom and Airtel Kenya announced plans to merge their mobile, enterprise and carrier business units into a new joint entity with industry regulator CA issuing a conditional approval in May.

However, activities at the CA have been stalled owing to a legal suit challenging the authority of the new board of directors appointed in July.

If the court nullifies the appointment of the board, key decisions made in the past weeks could be rescinded.

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afaricom’Airtel KenyaMugo KibatiTelkom Kenya