Bharti Airtel Unit to Merge With Telkom Kenya

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India’s Bharti Airtel mentioned on Friday its unit Airtel Networks Kenya has agreed to merge with Telkom Kenya, the East African nation’s smallest telecom operator.

Three business sources informed Reuters final month that Bharti Airtel was in talks to purchase Telkom Kenya to create a stronger challenger to market chief Safaricom.

Kenya has one of the superior telecoms sectors on the continent, however Safaricom’s 65 p.c market share has curbed competitors and prompted the regulator to mull intervention.

Telkom, which is 60 p.c owned by London-based Helios Funding, accounted for 9 p.c of Kenyan cellular telecom subscribers final September, behind second-placed Airtel, which had a 22.three p.c market share.

The Kenyan authorities owns the remainder of Telkom’s shares.

The businesses will mix their respective cellular, enterprise and provider providers companies in Kenya to function as Airtel-Telkom, each companies mentioned.

The deal won’t contain Telkom Kenya’s in depth actual property holdings and a few authorities contracts for unspecified providers, the corporate mentioned.

No timeframe has been given for the deal, and each corporations will function as regular till the transaction is accomplished.

Earlier than cellular telephones took off, Telkom loved a monopoly for many years because the state telecommunications supplier, giving it entry to prime actual property that it nonetheless owns.

It was privatised in 2007 when French telecoms operator Orange purchased a majority stake, which was subsequently bought to Helios in 2015.

Telkom’s chief government Mugo Kibati will turn out to be the chairman of the brand new firm. Telkom mentioned it has the choice of taking as much as 49 p.c within the new entity if it hits undisclosed targets earlier than the deal is sealed.

However Telkom is unlikely to hit these targets and can most likely find yourself with their minimal stake of 30 p.c, an business government aware about the deal mentioned.

“The ultimate shareholding might be decided on the closing of the transaction,” Telkom mentioned in a press release.

Prasanta Sarma, the chief government of Airtel Kenya, will maintain the identical function within the mixed entity, Telkom mentioned.

“The one that is within the driving seat is Airtel due to their numbers. You at all times wish to be within the government after a transaction like this,” mentioned the business supply.

Safaricom chief government Bob Collymore informed Reuters final month the merger of Airtel and Telkom can be welcome as it will increase competitors within the sector, forcing the regulator to ditch its proposed measures towards the market chief.

© Thomson Reuters 2019

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