Telkom Kenya has confirmed plans to merge with Airtel Kenya to form a new joint venture Airtel-Telkom to boost its market share in an unbalanced telecoms space.
According to an announcement by the companies, the two entities will "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's real estate portfolio and specific government services will not form part of the new JV.
Airtel-Telkom aims to enhance scale and efficiency while grow its distribution network and greater brand presence. The JV will also focus on increasing the value of connectivity for SMEs.
"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," Telkom Kenya said.
An excerpt from the announcement reads: "Telkom Kenya has the option of holding up to 49 percent 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."
There won't be any management change in the two companies currently and the two brands 'Telkom' and 'Airtel' will continue to co-exist.
Both Airtel and Telkom have been vocal about Safaricom's dominance in the market and have called on the regulator to ensure a level playing field.
According to the latest quarterly sector report (July – September 2018) by the Communication Authority of Kenya (CA), Airtel Kenya had 10,413,732 post and prepaid subscribers, while Telkom Kenya had 4,188,517 subscribers.
Market leader Safaricom had 29,943,641 subscribers, taking 64.7% of the market share.
"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," said ICT Cabinet Secretary Joe Mucheru.
The intended merger is subject to approval by the Competition Association of Kenya and the CA.