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Telkom Kenya Pulls Out of the Merger Deal with Airtel

Helios Investment Partners, the 60 percent shareholders in Telkom Kenya (Formerly Orange Group by France Telecom) has opted out of its proposed merger with Airtel Kenya.

“Considering the challenges experienced in getting all the approvals required to complete the transaction, the company has simultaneously been evaluating alternative strategic options to strengthen its position and offering, within the market, as a genuine alternative for the consumer, enabling us to entrench our current brand as Kenya’s preferred data network service provider,” reads, in part, a statement from Telkom Kenya.

These announcements implies that the notice of redundancy issued by the Telkom Kenya in July 2019 is withdrawn and earlier envisaged redundancies no longer apply.

“Consequently, the notice of redundancy issued by the company on 31st July 2019 is withdrawn and the earlier envisaged redundancies no longer apply. Considering the challenges experienced in getting all the approvals required to complete the transaction, the company has simultaneously been evaluating alternative strategic options to strengthen its position and offering, within the market, as a genuine alternative for the consumer, enabling us to entrench our current brand as Kenya’s preferred data network service provider,” Telkom Chief Executive Mugo Kibati said after carefully reviewing the available options.

Telkom Kenya had fired 575 staff and asked them to reapply to the new outfit that would have been known as Airtel-Telkom.

Airtel-Telkom Allowed to Sell 40% of Merged Business

Airtel-Telkom merger dropped in a decision that has been mutually agreed with Airtel Networks Kenya Limited.

In February this year, the Telkom-Airtel merger hit a wall after the two companies filed an application with the Competition Tribunal to protest the terms imposed by the Competition Authority of Kenya (CAK).

The merger terms they opposed were:

  • The merged entity should retain all workers for two years
  • The companies should not sell any assets of the resultant entity within the first five years
  • The entity should not sell the four frequency spectrum licences and five operating licences including a submarine cable landing licence.
  • Spectrum resources owned by Telkom to revert to the State

The Competition Tribunal ruled in favour of the two firms and dropped CAK control over the licenses. This allowed the two firms to continue trading in the permits in line with conditions imposed by the Communication Authority of Kenya (CA).

In February 2019 Airtel Networks Kenya unit agreed to buy Telkom Kenya, Kenya’s third-largest mobile operator, which the state still has a 40% shareholding after a majority stake was sold in 2007.

According to the latest statistics from the Communication Authority of Kenya, Airtel gained by 0.7 percentage points to post a 26.6% market share recording a 4% increase in mobile subscribers.

Airtel subscribers grew from 14,118, 569 in December 2019 to 14,682,293 in March 2020. Telkom Kenya lost 0.4 percentage points to post a market share of 5.8% with 3,190,661 subscribers.

The merger between the telecommunication firms would have seen them come up with a telco that would have had the financial muscle to fight the market monopoly of Safaricom.


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