To compete better against the dominance of telecommunications company, Safaricom, in Kenya, the local unit of Bharti Airtel Limited has entered into a consolidation agreement with Telkom Kenya Ltd, which is owned by Helios Investment Partners LLP.
Both Airtel and Telkom Kenya agreed to combine operations that Bloomberg report says will become the second-largest telecommunications operator in the East African nation after Safaricom Plc.
The consolidation will form a new telecoms company called Airtel-Telkom. The two companies will merge mobile, enterprise and carrier services, but will exclude Telkom’s real estate portfolio, and government services are not part of the deal.
In the consolidation agreement, Telkom, a company Helios Investment Partners LLP has a 60 per cent ownership stake, with the rest being that of the Kenyan government, will have an option of taking as much as 49 percent of the new company, it said in an emailed statement on Friday.
About Safaricom threat
Though yet to receive regulatory approval, Airtel-Telkom will compete in the East African nation’s telecoms market against Safaricom, a subsidiary of South African-based Vodacom Group Ltd.
According to Kenya’s communication authority, as at end of September last year, Safaricom boasts of 29.9 million users in Kenya, which translated to a market share of 64.2 per cent, compared with Airtel’s 22.3 per cent.
Safaricom, East Africa’s biggest company by valuation, is dominant in the lucrative mobile-money transaction business, which rose almost 19 percent to 1.59 trillion shillings ($15.8 billion) in 2018, accounting for 78 per cent of such transactions, according to the regulator.
In the report, Mugo Kibati, the Telkom Chief Executive Officer will chair Airtel-Telkom, while his Airtel counterpart, Prasanta Sarma, will be its executive-head, according to the statement.
Airtel’s footprint in Nigeria
Recall Airtel had been linked as one of the possible bidders for Nigerian telecommunications company, 9mobile before withdrawing from the bidding process. If the company had won the bid, it would have cemented it position as the second largest telecoms company in Nigeria. Meanwhile, the company has continued to deny reports it intends to exit the African market, stating its intention is to make strategic acquisition and market expansion.
With this new consolidation deal with Telkom Kenya, Airtel is proving its commitment to the African market. It should be noted that the company recently secured fund from the Qatar Investment Authority.
Airtel currently has 29,757,791 million subscribers in Nigeria, coming second behind MTN Nigeria with 43,899,957 million subscribers, and before Globalcom which accounts for 28,054,948 million subscribers.