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Telkom Kenya Limited and Airtel Networks Kenya 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. The merged company will be chaired by Telkom Kenya Limited CEO, Mr. Mugo Kibati while Airtel Networks Kenya Chief Executive, Mr. Prasanta Sarma, will be appointed Chief Executive Officer.
The finalisation 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, organisational 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.
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.”
Financial Fortune is a digital financial news website and print business magazine published in Nairobi by Fortune & Transit Publishers Ltd and covers the financial services sector through news, views and extensive people coverage since 2018.