Telkom and Airtel have been given the green light to resume their proposed merger talks, again. The rather unexpected turn of events took place after the High court quashed a letter from the Ethics and Anti-Corruption Commission (EACC). In its letter, EACC had barred the questionable sale of Telkom’s assets during the merger period, effectively halting the talks.
High Court judge Jairus Ngaira in his ruling said that EACC’s move to stop the sale or recover assets already sold was illegal.
“It follows that to the extent that the respondent purported or attempted to recover public property or prohibit its sale through a letter, its decision is ultra vires. In the language of judicial review, its decision can be said to be unlawful because it is tainted by all or either of the grounds of illegality, irrationality and procedural impropriety,” the judge said.
The merger talks were called off by Telkom after the EACC decided to conduct investigations of the company against a backdrop of graft allegations. The Communications Authority of Kenya (CA) and Competitions Authority of Kenya (CAK) said they would only approve of the merger plans only if EACC cleared the proposed transaction between the two telcos.
In a gazette notice last month, the EACC said its investigations had established that the proposed privatization of Telkom was above board and that they had not found any impropriety or culpability in respect to the public officials mandated with the process. The EACC however said it was awaiting direction from the Director of the Director of Public Prosecutions (DPP)
Telkom moved to court in February 2020 seeking to quash the letter from EACC seeking to recover or stop the sale of its properties. EACC cited reported cases of misappropriation of the company’s assets ahead of the proposed merger.
Telkom said the recovery or halting of the sale of its properties would result in its exposure to significant losses and damages including breaching its obligations under sales agreements concluded with third parties.
The EACC said that the government had a 40 percent stake in the telco, and as such they were mandated with protecting the Public interest against corruption and economic crimes.
Upon the collapse of the merger talks last year, Telkom announced plans to venture into a different direction, prioritizing its data services over the saturated voice market.