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Telkom-Airtel Merger Cause Ripples in Telecommunication Industry

Telkom-Kenya Managing Director Mugo Kibati has reassured Safaricom Ltd that their merger with Airtel was not intended to create unfair business competition in the communication industry.

He brushed aside a protest letter Safaricom had written to Communications Authority of Kenya not to authorize the merger arguing that their opposition was misplace because the move was meant to restructure the two companies for better service provision to  consumers.

Kibati said that it was unfortunate that Safaricom appeared to be attempting to create a monopoly by denying consumers their freedom of choice through competitive pricing of products that returned the value for their money.

“ we want to offer consumers credible options,  and we are wondering whether Safaricom does not want to see the sector grow, or that they were wary of competition and even more precisely wary of choice, competitive pricing and value for money for the consumer” he posed.

The jitters comes after Telkom Kenya Limited announced the merger with includes a joint partnership in Mobile Enterprise and Carrier Services under the umbrella Telkom-Airtel company.

“We have no problem with our colleagues at Safaricom. What they should probably know is that we are just trying to restructure our business,” said Kibati, adding that they have also given the Ethics and Anti-Corruption Commission (EACC) all information requested and would continue to cooperate until a substantive conclusion was reached.

“It is unfortunate that the dominant player appears bent on denying Kenyans the chance to still enjoy the benefits brought by an alternative player since the presence of a strong second player is bound to give Kenyans value for their money,” Kibati said.

He noted that the aim of the agreement was to establish an entity with enhanced scale and efficiency, large distribution network and strategic brand presence, enhancing the range, quality of products and service offering in the market, choice and convenience to the customer.

“I need to reiterate that the current transaction between Telkom and Airtel is still an ongoing process but one that has so far followed due legal and regulatory processes,” Kibati noted, upbeat that the combined entity would see more investments into the joint networks, to further accelerate the roll out of future technologies.

He was categorical that “monopoly not only poses a systemic risk, price increase, innovation inertia and a stunted market owing to the lack of competition, but also ultimately leaves the consumer without choice,” added Kibati.

“The clients of Telcom-Airtel’s joint enterprise and carrier services businesses will benefit from a larger fibre footprint and a diverse portfolio of world class solutions upon the regulatory approvals,” said Kibati.

He explained that the regulatory approvals were about establishing an entity that would be able to offer customers and consumers choices and more innovative services.

On the delayed proposed transaction which was granted by the Communications Authority on 10th May 2019, Kibati said the delay could find citizens in reversion of the Telcom sector into a monopoly negatively affecting the welfare of consumers and the economy.

Kibati noted that the transaction would see engagement of employees into a combined Telkom-Airtel entity and its outsourced partners upon receipt of regulatory approvals.

“This transaction now leaves the future of our staff and their dependence with a possibility of loss of jobs and negative impact in an economy,” remarked Kibati.

Airtel said in February that its Airtel Networks Kenya unit had agreed to buy Telkom Kenya, in which the state still holds 40 per cent after a majority stake was sold in 2007.

 By Lucy Wambui and Angelina Mutindi

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