Telkom Kenya set to go it alone as Airtel merger falls apart
What you need to know:
- Kibati said Telkom decided to pull out of the plan due to the confidence it got from its new direction.
- The merger between the pair would have seen them come up with a telco that would have had the financial muscle to fight market leader Safaricom.
- Airtel was also counting on the deal to help it pull its Kenyan operations out of loss-making territory.
The planned merger between mobile firms Telkom Kenya and Airtel Networks Kenya has collapsed, providing relief to hundreds of employees who were on the firing line had the marriage been consummated.
Telkom Chief Executive Mugo Kibati said after carefully reviewing the available options, the firm had now opted to adopt an alternative strategic direction and will no longer be pursuing the proposed joint venture transaction with Airtel Networks Kenya Limited.
“Consequently, the notice of redundancy issued by the company on 31st July 2019 is withdrawn and the earlier envisaged redundancies no longer apply,” Mr Kibati said.
The firm had fired 575 staff and asked them to reapply to the new outfit that would have been known as Airtel-Telkom.
End of process
This brings to an end the process that started in February 8, 2019.
Mr Kibati said after the merger plans of Telkom Kenya's mobile, enterprise and carrier businesses with Airtel Networks Kenya Limited were announced, the company had been pursuing various approvals required to complete the transaction.
“Considering the challenges experienced in getting all the approvals required to complete the transaction, the company has simultaneously been evaluating alternative strategic options to strengthen its position and offering, within the market, as a genuine alternative for the consumer, enabling us to entrench our current brand as Kenya's preferred data network service provider,” Kibati said.
Loss-making territory
The merger between the pair would have seen them come up with a telco that would have had the financial muscle to fight market leader Safaricom. Airtel was also counting on the deal to help it pull its Kenyan operations out of loss-making territory.
Kibati said Telkom decided to pull out of the plan due to the confidence it got from its new direction that was accelerated by digital transformation brought about by the recent dynamics of the Covid-19 pandemic.
The health crisis, he says, has made both businesses as well as individuals, acutely aware of the need to review direction, with respect to how “we do things, and the need to step-up.”
