Airtel Ditches Merger with Telkom Kenya

Airtel Ditches Merger with Telkom Kenya

Bharti Airtel has shelved a possible merger of its Kenyan unit with Telkom Kenya after the operators failed to reach an agreement on an investment roadmap, among other issues.

The operators began discussing a possible deal in April. Reports at the time indicated that the companies were considering merging elements of their businesses, with the ultimate goal of Airtel fully assimilating Telkom Kenya via a takeover bid.

The combined unit would have been better positioned to compete with Safaricom, which leads the market with 30 million subscribers, giving it a 72% market share according to statistics from Reuters. Airtel’s Kenyan unit and Telkom Kenya have a combined market share of around 23%, but Airtel “developed cold feet” over the merger, according to an unnamed industry source.

The country’s newest operator, Faiba, launched in December 2017 and offers the country’s cheapest 4G services, but has thus far failed to gain much ground in terms of market share. Its parent firm, Jamii Telecom, is an established ISP and fixed provider.

The Kenyan government is looking to foster greater competition to challenge the dominance of Safaricom, so the collapse of the merger may be something of a relief as it would have reduced the number of players in the market to three.

Politicians and operators alike have expressed frustration at Safaricom’s powerful hold on both the mobile space and the mobile money market. However, although a report commissioned by the Communications Authority of Kenya suggested that Safaricom should be forced to spin off its M-Pesa mobile money unit, the CA declined to enforce this recommendation.

While Safaricom has allowed some interoperability between M-Pesa and other financial services, the authorities are looking to enforce greater competition. A report on how to achieve this has been commissioned and is due for imminent publication.

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