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Airtel and Telkom merger still on hold over shareholding queries

By Moses Njagih | November 8th 2019 at 09:00:00 GMT +0300

Telkom Kenya CEO, Mugo Kibati(left) and Airtel Kenya CEO, Prasanta Das Sarma when they appeared before the Senate ICT Committee at Red Cross Building, Nairobi on 22/10/19 on the status of their merger. [Boniface Okendo,Standard]

The Ethics and Anti-Corruption Commission (EACC) says it has not approved the merger between mobile service providers Airtel and Telkom Kenya, and was still investigating the sale of the latter's shares to France Telkom.

EACC yesterday told a parliamentary committee that it was probing possible improprieties around how the shareholding of the Kenyan company was acquired, saying until the matter was cleared and those culpable are held to account, the agency would maintain that the merger remains on hold. 

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The anti-corruption agency has warned that it would hold to account anybody who proceeds with the merger before the green light is given.

EACC Director of Legal Services David Too said both the Treasury and the Communications Authority (CA) had been directed not to approve the deal yet. 

“We have not approved any merger and we have issued advisories to responsible government entities, including the National Treasury, to protect the interests of Kenyans in the approval process,” Mr Too said.

It also emerged that the Attorney General’s office had given an advisory opinion on conditions that must first be met before the merger can proceed.

The EACC team, that also comprised John Lekolol, the deputy director in charge of investigations, was appearing before the National Assembly’s Committee on Implementation of House Resolutions, which is following up on the implementation of the Public Investments Committee (PIC) recommendations on the privatisation of Telkom Kenya, which happened in 2007.

Balance sheet 

PIC, which investigated the recapitalisation and balance sheet restructuring of Telkom Kenya, directed EACC in 2014 to investigate how the sale was conducted after the matter raised suspicion of underhanded deals.

The committee had asked the investigators to hold to account any government or private individual found culpable.

France Telkom won the privatisation bid against four companies that returned proposals, taking 51 per cent shareholding while the government retained 49 per cent.

At the time of privatisation, the government's cumulative advance to Telkom Kenya was Sh7.1 billion, while loans cumulatively advanced to France Telkom and its associated companies were Sh50 billion as at December 2012.

Yesterday, Too told the committee chaired by Moitalel ole Kenta that they had asked the Treasury and CA to halt the merger process pending the conclusion of investigations.

“We are seeking mutual legal assistance from several overseas countries that include Mauritius, Cayman Islands, the Netherlands, United Arab Emirates, India, Sudan, France and South Africa so that we can conclude our investigations,” Too told MPs. 

The committee heard that Attorney General Kihara Kariuki had advised that a comprehensive valuation of both companies first be established after full disclosure is done.

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