Bharti Airtel and Telkom Kenya have agreed to merge their Kenyan operations, enabling them to compete more effectively with the dominant Safaricom.
The two operators have agreed to set up a joint venture known as Airtel Telkom comprised of their respective carrier services, enterprise and mobile units. The deal is subject to regulatory approval and no financial information has been disclosed.
The merger has come close to happening in the past, with two months of negotiations last year coming to nothing. Airtel walked out on the talks in June after the companies failed to reach an agreement on strategies for future investments, among other points. However, Reuters last month reported that merger discussions had resumed.
Telkom Kenya’s shares are split 60:40 between Helios Investment Partners and the Kenyan government. The former was reportedly looking to divest the holding for cash. With Airtel planning an IPO of its African business in May or June this year, the merger will be a boon as it is likely to increase Airtel Africa’s overall value.
Airtel Telkom will be “an entity with enhanced scale, operational efficiency and strategic brand presence”, according to a statement from Airtel. It added that the unit would receive investment from both its parent firms “to further accelerate rollout of future technologies”.
At the end of the last quarter, figures from the Communications Authority of Kenya showed Airtel Kenya as having 9.7 million mobile subscribers, while Telkom Kenya had 3.9 million. Their combined total will not put them ahead of Safaricom, which had 29.7 million.