Safaricom fights back Telkom allegations

By Steve Umidha

Kenya’s biggest mobile operator Safaricom has hit back on claims leveled against it by rival Telkom Kenya that it was deliberately holding back planned merger talks with Airtel Kenya.

“Our attention has been drawn to claims by Telkom Kenya that Safaricom is opposed to its proposed merger with Airtel Kenya. We wish to clarify that this is not Safaricom’s position.

Safaricom believes in competition based on innovation, investment, focus on brand building and service to the customer. Industry players are free to engage and organize themselves as they please, subject to regulatory approvals, to achieve their objectives,” said Safaricom’s interim Chief executive officer Michael Joseph.

Telkom’s Chief executive said Tuesday that the deliberate tactics by Safaricom – the industry’s dominant player in terms of customers and revenue share, saying the move would hold back the sector’s growth and further deny customers an opportunity to choose their preferred marque of usage.

“We believe that our colleagues at Safaricom want to delay the process, it is the dominant player and clearly don’t want to see the sector grow,” said Mugo Kibati, adding that such a move would monopolize the sector and stifle smaller players’ survival.

In a statement a day after Telkom blasted the telco firm, Safaricom said it worked with the industry regulator Communication Authority of Kenya and Airtel Kenya in 2014 during a similar transaction when Essar Telecom sought to exit the market.

“While we are supportive of industry changes that seek to deliver greater choice and value to consumers, we have raised valid concerns that we hope the regulator will consider and address as part of the approval process,” it said.

The telco giant has as a result laid down its conditions if the merger deal is to be Okayed by the regulator.

“The first is the debt owed by the two operators, amounting to KES 1,297,448,468.88, incurred for the provision of various services including interconnection, co-location and fibre services. This debt is due and payable, based on the agreement to provide services entered into with the two entities as distinct operators. Our expectation is that the payment obligations should be settled in full before the transfer of business is effected.

The second is the need to rebalance the frequencies allocation. Post-merger, Airtel-Telkom will jointly hold 77.5 MHz of spectrum against a customer base of 17.3 million, compared to Safaricom’s 57.5 MHz with almost double the customer base at 31.8 million. Given the size of Safaricom’s customer base in comparison to the current spectrum holdings, it is apparent that the transaction will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share,” said Safaricom Wednesday.

The third requirement made by Safaricom is the equal treatment of operators and creation of a level playing field within the industry, specifically in relation to licensing and operations requirements.

“Having articulated our concerns, we await direction from the regulator on the way forward, especially in regard to the debt payment and rebalancing of frequencies allocation. We also look forward to working alongside other industry players to continue delivering high quality, innovative services to Kenyans,” it concludes.