Airtel and Telkom Kenya have dropped the merger talks after facing headwinds in obtaining approvals from the authorities, which they have been pursuing since last year.
In a statement, Telkom Kenya said tha move was a result of “challenges experienced in getting all the approvals required to complete the transaction” and is now “evaluating alternative strategic options”.
“After carefully reviewing the available options, Telkom has opted to adopt an alternative strategic direction and will no longer be pursuing the proposed joint venture transaction. This decision has been mutually agreed with Airtel Networks Kenya Limited<‘ Telkom said in a statement.
On its part, Airtel said that the negotiations had taken unnecessarily a long time, the reason they decided to drop the merger.
“Despite Airtel Africa plc and Telkom respective endeavours to reach a successful closure, the Transaction has gone through a very lengthy process which has led the parties to reconsider their stance. Accordingly, Airtel Africa plc and Telkom have decided to no longer pursue completion of the Transaction,” Airtel said in a statement.
If the merger would have sailed through, Telkom Kenya’s key shareholder Helios would have retained 40 percent, Kenyan Government 10 percent while Bharti Airtel would be the majority shareholder with 50 percent. The new entity would have been called Airtel-Telkom.
Last year, Ethics and Anti-Corruption Commission (EACC) announced that it was investigating graft allegations against the proposed merger, forcing the Communication Authority of Kenya (CA) to suspend it.
Prior to the merger proposals, Telkom and the treasury was under investigation on how the government sold part of its stake to French firm Orange. Orange later sold its shares to UK firm Helios Investment, which currently holds 60 percent stake while the Government of Kenya holds 40 percent.
“We have advised the parties that, in light of government shareholding in Telkom Kenya, approval shall only be granted once all the conditions set out by the Authority are fulfilled and the transaction is cleared by EACC,” said Christopher Wambua, CA director in charge of communications and public affairs.