Telkom blames State for delay of merger

Senate ICT Committee Chairman Gideon Moi during a meeting with Telkom and Airtel officials. [Boniface Okendo, Standard]
The Cabinet is standing in the way of the merger between Airtel and Telkom Kenya, the two firms say.

Telkom Kenya yesterday said it had sought the blessings of the Cabinet to merge with its rival but has received no word months later.

The Government holds a 40 per cent stake in Telkom.

The two companies now say the delay is hurting their businesses, having put their strategic plans on ice on the hopes of rolling out a joint strategy under the combined entity to be branded Airtel-Telkom.

SEE ALSO :Why Telkom-Airtel merger has been suspended

Telkom Kenya Chief Executive Mugo Kibati said the operator had approached the Cabinet for approvals out of courtesy as it had already received clearance from the Attorney General, who had informed the firm that it did not need Cabinet approval.

The deal had also received a nod from Treasury, which co-owns the operator with UK headquartered private equity firm Helios Investment Partners (60 per cent).

“The AG was clear that we did not require Cabinet approval but we went the extra mile to ask the Executive for approval. We have not received feedback,” he told the Senate Committee on ICT yesterday.

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He added that the failure by Cabinet to give word on the transaction was also partly the reason that regulatory authorities had been slow to approve the merger.

Mr Kibati, together with his Airtel Kenya counterpart Prasanta Das Sarma appeared before the committee to give an update on the merger. The two companies hope to conclude the deal by the end of this year.

SEE ALSO :Telkom says merger with Airtel still on despite EACC probe

Airtel and Telkom announced the merger plans in February, a survival move for the two operators that have been making losses to form a formidable competitor to market leader Safaricom.

The Senate committee’s Chairman Gideon Moi said the legislature would endeavour to put in place enabling laws and policies to ensure the ICT sector remains competitive and innovative.

“We encourage competition and want to ensure that there is a level playing field… we are also interested in making sure that the consumer is getting a good deal,” said Gideon, who is the Baringo Senator.

“We are interested in Kenyans getting quality coverage as well as that Kenya remains a top ICT hub that encourages innovation.”

The new Airtel-Telkom outfit is meant to bring together certain aspects of each business specifically the mobile, enterprise and carrier services businesses. It will not, however, benefit from some of the assets that its predecessors had including telecommunication masts.

SEE ALSO :Why EACC wants Airtel, Telkom merger stopped

Airtel and Telkom have recently sold off many of their assets, leaving the mobile operators almost bare. Telkom Kenya’s prime real estate portfolio and specific Government services will not form part of the combined entity.

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