Airtel-Telkom merger plans put on hold by Communications Authority of Kenya

The long anticipated merger between Kenyan telcos Airtel and Telkom has hit another doldrum.

The Communications Authority of Kenya (CA) suspended the merger owing to investigations into the intricate details of the deal by the Ethics and Anti-Corruption Commission (EACC).

Telkom is also under a separate investigation to further understand the Treasury’s sale of its stake in Telkom Kenya to Orange, which later sold to Helios, a private equity fund.

Helios now holds 60% (majority) stake in Telkom, while the Kenyan government holds the remaining 40%.

CA director in charge of communications and public affairs, Christopher Wambua, said, “We have advised the parties that, in light of government shareholding in Telkom Kenya, approval shall only be granted once all the conditions set out by the Authority are fulfilled and the transaction is cleared by EACC.”

Some of the officials set to be questioned by the EACC include: senior managers at Telkom Kenya, the Treasury, the CA and the Competition Authority of Kenya (CAK).

The EACC requested CA to suspend the merger until the conclusion of both investigations.

EACC CEO, Twalib Mbarak, in the letter to CA, said, “Due to public interest, the commission (EACC) requests that you halt the processof merger pending the ongoing investigations. The commission is investigating an allegation of misappropriation of public funds in the process of recapitalisation and restructuring the balance sheet of Telkom Kenya Limited in 2012 and the current merger of Telkom Kenya with Airtel Kenya.”

Related article: Former Airtel staff in Kenya challenge Airtel-Telkom merger

The merger was announced earlier in 2019 in a bid position both companies, under a unified banner of Airtel-Telkom, in a better place to undercut market share from Kenya’s telco giant, Safaricom.

Helios would retain 40% of the merged entity, the Kenyan government 10%, while the majority shareholder would be Bharti Airtel, holding the remaining 50%.

The merged entity would control an estimated 34% of the market, which is still nowhere near Safaricom’s 62% market share.