Safaricom Blocks Airtel-Telkom Merger Because Of Sh1.3 Billion Debt

Kenya’s giant Telco Safaricom wants Airtel and Telkom Kenya to settle Ksh.1.3 billion debt ahead of the planned merger of operations by the two mobile service providers.

Acting Safaricom Chief Executive Officer Michael Joseph stated through a statement to the media that the company is not opposed to the merger between Airtel and Telkom Kenya as it has been alleged before but raised three concerns among them the Ksh.1.3 billion debt the two companies owe the Telco giant.

“While we are supportive of industry changes that seek to deliver greater choice and value to consumers, we have raised valid concerns that we hope the regulator will consider and address as part of the approval process. The first is the debt owed by the two operators, amounting to KES 1,297,448,468.88, incurred for the provision of various services including interconnection, co-location and fibre services. This debt is due and payable, based on the agreement to provide services entered into with the two entities as distinct operators,” reads the statement.

Safaricom is further seeking to have the Communications Authority re-balance frequencies shared between the three companies.

“The second is the need to rebalance the frequencies allocation. Post-merger, AirtelTelkom will jointly hold 77.5 MHz of the 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,” added Michael Joseph.

According to Safaricom, if Airtel and Telkom Kenya are allowed to merge without reorganization of frequencies, the transaction will create a disproportionate imbalance in the spectrum allocation, which will be inconsistent with the market share.

Safaricom through its acting CEO is also calling for equal treatment of operators and creation of a level playing field within
the industry, specifically in relation to licensing and operations requirements.

The remarks by Safaricom come on the back of claims by Telkom Kenya that Safaricom is opposed and intends to sabotage the proposed merger with Airtel Kenya. According to Telkom CEO Mugo Kibati, Safaricom is seeking to frustrate the process with a view to monopolize the telecommunications sector to its advantage.