Telkom Kenya and Airtel have released the official statement on their planned merger. The two mobile service providers have signed a binding agreement to merge their Kenyan operations in mobile, enterprise and carrier services. However, Telkom’s real estate investment and specific government services are not part of the deal.
The new enterprise will be referred to as Airtel-Telkom. Telkom Kenya’s CEO Mugo Kibati will be the company’s Chair while, Airtel Networks Kenya CEO Mr. Prasanta Sarma, will be the company’s Chief Executive Officer.
Operations at the two companies will run as usual for the time being. As per the statement released to the press, there will be no immediate changes to the ‘leadership and management, legal, organisational and staffing structures.’ The statement also added, “….service delivery to the respective companies’ customers as well as engagement with all business partners of both companies will continue to operate as usual.”
Upon approval from the relevant authorities, the telecommunication companies will merge their Kenyan operations. The move will create a larger and more efficient company with a variety of products and services.
The union between Telkom Kenya and Airtel Networks Kenya is expected to pose significant competition on the market leader – Safaricom. According to Faida Investment Bank analysts, Airtel and Telkom have experienced rapid growth in market share in the past year. They attribute the growth to increased capital expenditure on infrastructure by the two firms. The analysts expect the combined entity to keep up the pace in infrastructure investment and therefore growth in their market share.
According to the National Treasury Cabinet Secretary Henry Rotich, “This move is well aligned with the government’s agenda to optimise the value of the assets that it holds in trust, on behalf of Kenyans, while cementing the country’s position not only as a regional business hub but also as an international investment magnet.”