Airtel Kenya, subsidiary of Bharti Airtel, has signed an agreement with Telkom Kenya to merge their respective mobile, enterprise and carrier services businesses to create a new joint entity, Airtel Telkom. This move will likely increase competition in the Kenyan market with telecom leader Safaricom.
However, there hasn’t been any financial disclosure yet and the two operators are waiting for regulatory approval to finalize the deal.
The announcement follows a long period of uncertainty whether the merger would go ahead. In fact, the talks have started in June 2018 but Airtel dropped back following two months of negotiations, and due to disagreements on a number of issues including future investment plans. However talks had been resumed since last month.
The merger is set to also improve the overall valuation of Airtel Africa, ahead of Airtel’s planned IPO of the unit, which is likely to be held in May or June. In 2018, the company raised $1.25 billion to support the business.
According to Airtel, both companies plan to combine their operations in Kenya and establish “an entity with enhanced scale, operational efficiency and strategic brand presence”.
In addition, Airtel Telkom plans investing in networks “to further accelerate rollout of future technologies”. It will also enhance both operators’ enterprise and carrier businesses, providing a larger fiber footprint and a bigger portfolio of enterprise customers.
GSMA Intelligence predicts that together, Airtel Kenya and Telkom Kenya will to be able to group 16.2 million connections by the end of the current quarter, behind Safaricom’s 32.3 million.