Airtel, Telkom Wins Appeal Against Merger Conditions Imposed by Regulator

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Airtel and Telkom Kenya have won their appeal over merger conditions set by the Competition Authority of Kenya (CAK).

In a ruling delivers Monday, the Competition Tribunal overturned some of the conditions placed on the two telcos when the authority approved their proposed merger on December 13.

This means Bharti Airtel Ltd.’s  Kenya unit (Airtel Kenya) and Telkom Kenya Limited (Telkom Kenya) will keep their existing network licenses in accordance to conditions imposed by the Communications Authority of Kenya (CA) including the 900 megahertz (MHz) and 1800 MHz spectrum owned by Telkom.

Further, the two can enter into commercial agreements within the first five years including sale agreements but limits the entity from being taken over or floating more than 40 percent of its stake.

Before the appeal, the CAK restricted the merged entity from entering into any form of sale agreement within the next five years.

Telkom Kenya is 60 percent owned by private equity firm Helios and 40 percent owned by the Kenyan government.

However, they are required to retain at least 349 out of its 674 employees over the next two years while absorbing 115 of the staff into the merged entity.

In April 2019, the two telcos agreed to merge combining their respective mobile, enterprise and carrier services businesses in Kenya to operate as Airtel-Telkom.

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CONCERNS

On the other hand, Kenya’s top telecoms operator Safaricom had raised concerns with the proposed merger.

According to Safaricom’s former Chief Executive Michael Joseph, post-merger, Airtel-Telkom will jointly hold 77.5 MHz of the spectrum against a customer base of 17.3 million, compared to Safaricom’s 57.5 MHz with almost double the customer base at 31.8 million.

“Given the size of Safaricom’s customer base in comparison to the current spectrum holdings, it is apparent that the transaction will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share,” Joseph said.

Safaricom also wants the two entities to pay the KSh1.2 billion debt they owe the company, which was incurred for the provision of various services.