Companies

Telkom upbeat on closing merger by end of the year

telkom

A vendor hawking Airtel and Telkom sim cards. FILE PHOTO | NMG

Telkom Kenya expects to close its merger with Airtel by the end of the year after the anti-corruption commission gave the proposed deal the go-ahead.

Telkom Chief Executive Mugo Kibati told the Senate Committee on Information Communication and Technology that the regulators should move with speed to approve the deal that is expected to raise competition against Safaricom.

The Ethics and Anti-Corruption Commission (EACC) last week said it could not investigate how the deal was brokered because Telkom is a private company that could not be subjected to the State Corporations Act.

MPs had in August directed the EACC to investigate the deal and find out whether the government’s interests would be safeguarded after the merger.

“I am hoping that in the next couple of weeks we will see a lot of action to ensure that this transaction finally takes place,” Mr Kibati told the Senate committee.

“I am determined that this must happen before the end of this year and I believe we will do that even sooner.”

The decision by the anti-corruption agency means that the Communications Authority of Kenya (CA) and the Competition Authority of Kenya (CAK) were the only agencies holding up the deal.

The government owns 40 percent of the telco’s shares while private equity firm Helios holds the controlling 60 percent stake through its investment vehicle Jamhuri Holdings.

The CA said the two telcos must clear their debts before approval of the merger, with Mr Kibati saying the new entity will inherit the liabilities.

Safaricom had asked the regulator not to approve the merger unless the two pay Sh1.2 billion to the telco for interconnection, co-location and fibre services.

Telkom owes Sh906.6 million and Airtel Sh390.7 million with Mr Kibati saying they remain committed to clearing the debts even under the new entity.

“We owe many people a lot of money and the new company will shoulder many of the debts.

“Telkom is not going anywhere and the joint venture company will inherit a lot of liabilities,” he added.