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Competition Tribunal Eases Merger Conditions For Airtel and Telkom

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The Telkom and Airtel merger talks are back on the table after the Competition Tribunal overturned a number of conditions that had been imposed on the two telecommunication entities presenting challenges to progress with the plans.

The latest development from the Tribunal means the two firms can now revive their talks to take on Safaricom, the dominant player in the market in an effort to eat into their 64.8 percent market share.

According to the Tribunal, the conditions that had been set did not provide for healthy competition in the Telecom industry and had put Airtel and Telkom at a disadvantage to proceed with the merger talks.

The Competitions Authority of Kenya (CAK) had barred the two units as a merged entity from transferring or selling some of their operating and frequency spectrum licenses until the merger duration expires. They have now been allowed to keep their existing network licenses.

“Upon expiry of the term of the merged entities’ operating license, the spectrum in the 900MHZ and 1800MHZ acquired from Telkom shall revert back to the Government of Kenya (GoK),” CAK had spelt out in one of its conditions.

Read: Airtel Kenya Donates PPE to COVID-19 Health Workers

The CAK had also barred the merged entities from getting into any commercial agreements for the first five years after the merger. The tribunal threw out the condition and allowed provisions that blocked the merged entities from being taken over or listing more than 40 percent of its stake.

The two units were also granted the freedom to negotiate their own terms of access regarding the 4,204 kilometres of fibre optic that is managed by Telkom on behalf of the government of Kenya.

The merged entities will still be required to furnish the regulators with their annual reports on compliance for a period of two years.

The merged entities should also retain at least 349 employees from Airtel and the existing 674 employees at Telkom Kenya.

Read: Nairobi-based Airtel Employees Donate Ksh12.7 Million Towards Covid-19 Response Kitty

Apart from the conditions from CAK, Safaricom also wanted the two entities to clear up their debts before approval of the merger.

Safaricom wanted immediate payment of a combined debt of Ksh1.3 billion accrued by the pair as well as a rebalance of the frequency allotments. The demands prompted the appeal by Telkom and Airtel in February.

The CAK statistics show that Aitel gained slight more than a million subscribers between October and December 2019, to boost its market share to 25.9 percent. Telkom on the other hand, lost 167,297 subscribers to settle for 6.2 percent of the market while Equitel managed 3.1 percent of the market by the end of the period.

Although Safaricom maintained its dominance in the telecommunications sector , they lost 765,038 customers and command 64.8 percent of the market share.

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Written by Vanessa Murrey

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