The decision not to pursue the merger between two Kenyan telecoms businesses has been attributed to difficulty getting regulatory approval and a change in priorities due to the coronavirus pandemic.
The proposed merger between two of Kenya’s largest mobile telecommunications businesses has been cancelled.
In February 2019, Telkom Kenya , which is partially state-owned, had announced plans to merge its mobile, enterprise and carrier operations with Airtel Kenya , a subsidiary of India-headquartered Airtel Africa .
The companies had been in the process of seeking regulatory approval for the merger, but the deal has now been cancelled, with Telkom Kenya’s chief executive Mugo Kibati , in a statement, attributing the change of heart to “the challenges experienced in getting all the approvals required to complete the transaction”.
Kibati continued that Telkom “has simultaneously been evaluating alternative strategic options to strengthen its position and offering, within the market, as a genuine alternative for the consumer”.
He said that in agreement with Airtel, the company “has opted to adopt an alternative strategic direction and will no longer be pursuing the proposed joint venture transaction”.
The merger had been widely considered an attempt to challenge Safaricom ’s leading position in the market, but the end of the deal will be a relief to hundreds of Telkom employees, who had been due to be made redundant on completion of the deal.
Telkom is 60% owned by private equity investor Helios Investment Partners , and 40% by the government. Helios last month recevieed backing for its latest fund from the United Kingdom development finance institution CDC Group .
The redundancies were announced in July 2019, but Kibati stated that they have now been withdrawn, saying the company’s new direction “offers all Telkom employees the opportunity for greater career progression”.
The chief executive suggested that the “accelerated digital transformation brought about by the recent dynamics of the Covid-19 pandemic”, which have forced businesses and individuals to rely on telecommunications, would offer new opportunities to the company, particularly providing access to people previously unconnected to digital services.
Kibati is also the chairman of the Lake Turkana Wind Power Project, Africa’s largest wind farm, which was formally opened last year .