Airtel dials Telkom for share sale deal

A Telkom shop in the central business district in Nairobi. /MONICAH MWANGI
A Telkom shop in the central business district in Nairobi. /MONICAH MWANGI

India’s Bharti Airtel is in plans to buy out 50 per cent of Telkom Kenya to create a stronger challenger to Safaricom, sources close to the two have revealed.

Currently, Helios Investment, a London based firm, owns 60 per cent of Telkom while the government owns 40 per cent.

In the ongoing talks, Helios is expected to free 20 per cent of its shares.

This will see it remain with 40 per cent, as Airtel becomes the majority shareholder at 50 per cent while government reduces its shares to 10 per cent.

In 2015, Helios acquired 70 per cent stake from France Telecom (Orange) and agreed to transfer 10 per cent to the government of Kenya.

The Competition Authority said it had not received any formal communication on the merger from either of the two players.

“The Authority has not been notified of the proposed transaction as reported in the Press. However, parties are allowed to hold talks on possible mergers and acquisitions,” director general Francis Kariuki told the Star.

However, CA said, parties are required by the Competition Act to notify the Authority if the transaction meets the thresholds as provided for in the Merger Threshold Guidelines before implementation of a merger.

Merger applications are reviewed based on two main assessments which are impact on competition and public interest concerns. Thereafter, the Authority can grant approval unconditionally, approve the transaction with conditions or decline it as provided for in the Act.

Last year, talks on the two telcos merging were popular.

However, in an interview with the Star last August, Airtel Kenya CEO Prasanta Das Sarma denied any plans of merging saying it is a decision to be made at the board level.

Sources close to Airtel said Bharti’ Airtel chairperson Sunil Mittal is leading the negotiations.

If parties agree, sources said the deal is expected to be completed by the end of this quarter

Airtel is the second market leader in the country, controlling at least 22.3 per cent of the market share while Telkom controls 9 per cent.

Market leader, Safaricom controls 64.2 per cent.