Pay us Sh1.3bn in debt, then merge; Safaricom tells Airtel, TelkomSeptember 4, 2019
NAIROBI, Kenya, Sep 4 – Safaricom now says it is not opposed to the pending merger between Airtel Kenya and Telkom, a day after Telkom Kenya Chief Executive Mugo Kibati asked the telco to stop interfering with the merger, saying it was causing delays.
Interim Chief Executive Michael Joseph says Safaricom only wants a revision of spectrum allocation prior to the merger which will be largely imbalanced if not looked at.
According to Joseph, post-merger, Airtel-Telkom will jointly hold 77.5 MHz of spectrum against a customer base of 17.3 million, compared to Safaricom’s 57.5 MHz with almost double the customer base at 31.8 million.
“Given the size of Safaricom’s customer base in comparison to the current spectrum holdings, it is apparent that the transaction will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share,” Joseph says.
Safaricom also wants the two entities to pay the Sh1.2 billion debt they owe the company, which was incurred for the provision of various services including interconnection, co-location and fibre services.
Safaricom has already notified the Communications Authority of the debt; Telkom Kenya owes the company Sh906 million while Airtel owes it Sh390 million for the services.
The company has also asked for equal treatment of operators and creation of a level playing field within the industry, specifically in relation to licensing and operations requirements.
“Safaricom believes in competition based on innovation, investment, focus on brand building and service to the customer. Industry players are free to engage and organize themselves as they please, subject to regulatory approvals, to achieve their objectives,” he says.
Speaking from Kenya’s Capital Tuesday, Kibati said the market lacked competition owing to Safaricom’s dominance which was posing systemic risks, price increases and a stunted telco market leaving consumers with little to no choice.
“We are simply trying to restructure and improve our own business. Is the dominant player wary of competition?” Kibati wondered
Telkom will be counting on the merger plans with Airtel to take on Safaricom and end its loss-making streak.
Should the merger get the necessary approval, the entity, ‘Airtel-Telkom’, will create a stronger challenger to Safaricom’s 65 percent market share that has curbed competition.
As of March, Telkom accounted for 7.9 percent of the country’s mobile telecom subscribers, behind Airtel’s 26.1 percent which ranks second.