Telkom Kenya and Airtel Kenya announce plans for Merger

Established as a telecommunications operator in April 1999, Telkom is 60 per
cent owned by Helios Investment Partners, with the remaining stake held by
Kenyans through the Government of Kenya. Its merger with Airtel Kenya, a
subsidiary of Bharti Airtel Limited; a leading global telecommunications
company with operations in 18 countries across Asia and Africa is a big step
in strengthening the telecommunications sector. Headquartered in New Delhi,
India, Airtel ranks amongst the top 3 mobile service providers globally in
terms of subscribers. The company’s product offerings include 2G, 3G and
4G wireless services and mobile commerce. Together, Airtel Telkom seeks to
connect the people that keep Kenya on the move by providing integrated
telecommunications solutions to individuals, Small and Medium-sized
Enterprises (SMEs), Government and large corporates in Kenya, drawing
from a diverse solutions suite that includes voice, data, mobile money as well
as network services. Writes Corporate Watch Magazine’s Felix Boyd.

In Summary
– The final shareholding will be determined at the closing of the transaction
– Telkom Kenya has the option of holding up to 49 per cent of that shareholding
– The respective Mobile, Enterprise and Carrier Services businesses in
Kenya to operate under a joint venture company to be named Airtel-
Telkom.
– The finalization and closure of the transaction is subject to approval
by the relevant authorities.
– The combined entity will see sustained investments in networks to
further accelerate roll out of future technologies

Telkom Kenya Limited and Airtel Networks Kenya Limited, have announced
the signing of a binding agreement that will see the shareholders of the two
companies enter into an agreement to merge their respective Mobile,
Enterprise and Carrier Services businesses in Kenya to operate under a joint
venture company to be named Airtel-Telkom.
Telkom Kenya Limited’s real estate portfolio and specific government services will not
form part of the combined entity.  The final shareholding will be determined at the
closing of the transaction. Telkom Kenya has the option of holding up to 49 per cent
of that shareholding. Telkom Kenya Limited CEO, Mr. Mugo Kibati will chair the
merged company while Airtel Networks Kenya Chief Executive, Mr. Prasanta Sarma,
will be appointed Chief Executive Officer.
The finalization and closure of the transaction is subject to approval by the
relevant authorities.

Airtel Networks Kenya Limited (Airtel Kenya) and Telkom Kenya Limited (Telkom
Kenya) will see no immediate changes to their operations, which will continue as
usual. Similarly, there will also be no change to the current respective leadership and
management, legal, organizational and staffing structures. Additionally, both brands:
‘Airtel’ and ‘Telkom’, as well as their respective products and solutions, will continue to
co-exist. Similarly, service delivery to the respective companies’ customers as well as
engagement with all business partners of both companies will continue to operate as
usual.
Powered by its vast fibre optic infrastructure, Telkom is also a major provider
of wholesale, carrier-to-carrier traffic within the country and the region and is
building on a strong, consumer-centric ethos that is committed to providing
innovative, accessible and refreshingly simple communications solutions that
suit customers’ everyday communication needs.
As per the agreement, both the partners will combine their operations in
Kenya and establish an entity with enhanced scale and efficiency, larger
distribution network and strategic brand presence, thereby enhancing the
range and quality of products and service offerings in the market, and greater
choice and convenience to the consumer.
The combined entity will see sustained investments in networks to further
accelerate roll out of future technologies. The Enterprise and Carrier Services
businesses will get a boost with a larger fibre footprint and increased number
of enterprise customers – including both large corporations and SMEs who
would have access to a diverse portfolio of world-class solutions.
Commenting on the agreement, National Treasury Cabinet Secretary, Mr.
Henry Rotich said: “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.”
ICT Cabinet Secretary, Mr. Joe Mucheru commented: “ICTs remain a vital
link to achieving Kenya’s economic goals and our national development
agenda, particularly with respect to service delivery. Such mergers have had
positive impact on the development of the sector and service levels to
consumers in other markets. Similarly, we look forward to this merger leading
to the introduction of new technologies and telecommunication products
which will, in turn, support the growth of other business sectors of our
economy, thereby spurring national production to meet the growing demand
locally and beyond.”

 

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