How Airtel and Telkom are plotting to end Safaricom’s dominance

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Safaricom telecommunication company has enjoyed the monopoly of Kenyan Market for quite some time. The success of Safaricom can be tagged to the time when Kenya did not have a stable communication company and it came took over everything by storm.

Since then it has dominated the Kenyan Market now.

The rise of Airtel and Telkom has been a threat to the existence of Safaricom providing stiff competition in the market place.

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But Airtel and Telkom are now making considerate strides to make sure that they intensify the competition.

Airtel Kenya has revived talks with Telkom Kenya for a possible merger or buyout that is expected to create a financially strong outfit to compete with market leader Safaricom.

Telkom Kenya CEO Mugo Kibati on Monday confirmed that the two companies are back on the negotiation table.

“It is common practice within the ICT industry to conduct exploratory conversations; to assess the market for areas of synergy, co-operation and partnership, with the intent of giving customers greater value and superior experience,” he said in an emailed response.

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He, however, did not give an update on the progress of the discussions that come at a time the two firms have been making sustained gains on Safaricom’s market share.

“As has been our practice, we will continue to communicate significant developments in a timely manner, as we execute our business strategy,” said Mr Kibati who joined Telkom in November last year.

London-based Helios Investment, which owns a 60 per cent stake in Telkom, is looking to partly cash out of the investment which it entered in 2015, Reuters news agency reported, adding that the deal will be sealed by March. Successful talks will see the two firms seek regulatory approvals from the Competition Authority of Kenya (CAK).

On Monday, the Authority said it was yet to be notified of the proposed transaction.

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“Parties are allowed to hold talks on possible mergers and acquisitions, but are required by the Competition Act to notify the Authority if the transaction meets the thresholds as provided for in the Merger Threshold Guidelines before implementation of a merger,” said the CAK.

The Authority considers merger applications mainly based on impact on competition and public interest concerns.

It can either grant approval unconditionally, grant with conditions or decline.

Latest data from Communications Authority of Kenya (CA) covering three months to September showed Airtel had a market share of 22.3 per cent while Telkom had nine per cent.

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A successful deal could hand them a combined share of 33.3 percent against Safaricom’s 64.2 percent.

The talks come at a time Bharti Airtel chairman Sunil Bharti Mittal has concluded a deal with Tanzania government to cede part of Airtel Tanzania’s ownership to the state.

A section of the press reported that Mr Mittal was in Kenya to take part in sealing the Airtel deal through talks that will extend to government officials.