Airtel arm signs merger pact with Telkom Kenya

S Ronendra Singh New Delhi | Updated on February 08, 2019 Published on February 08, 2019

New entity to become stronger No. 2 player in the African nation

Bharti Airtel on Friday said that its subsidiary, Airtel Networks Kenya (Airtel Kenya), has signed an agreement with Telkom Kenya for merging their respective mobile, enterprise and carrier services businesses in Kenya to operate as – ‘Airtel-Telkom’.

The finalisation and closure of the transaction is subject to approval by the relevant authorities. The new entity will become a strong number two operator in terms of both revenues and subscribers. Airtel Kenya is currently No.2 operator in the country.

The Kenyan telecom market is right now led by Safaricom, which has a market share of 65 per cent.

“As per the agreement, both the partners will combine their operations in Kenya and establish an entity with enhanced scale, operational efficiency and strategic brand presence,” Airtel said in a statement.

The entity will invest in networks to further accelerate roll out of future technologies. The company however, did not disclose any investment amount.

“The Enterprise and Carrier Services businesses should benefit from a larger fibre footprint and an increased number of enterprise customers — including both large corporations and SMEs — who would have access to a diverse portfolio of world-class solutions,” the company said.

The agreement will provide Airtel Kenya the advantage and access to Telkom Kenya’s Enterprise and Carrier Services businesses.

According to sources, the combined entity would have over 31 per cent market share. As of end September, Airtel Kenya voice and mobile data market shares was at 33 per cent and 22 per cent respectively.

Grown in African market

Bharti Airtel, which is bleeding in the Indian market with cut-throat competition in tariffs against Reliance Jio, has some growth story in the African market. The financial performance of Airtel Africa continues to improve after turning positive in terms of net profit and operating free cash flow over the last several quarters.

For instance, for the third quarter ended December 31, Airtel Africa’s revenue grew by 11 per cent on a YoY basis. Data traffic grew by 61 per cent voice minutes increased by 25 per cent and Airtel Money throughput grew by 29 per cent on a Y-o-Y basis.

Consequently, EBITDA margin has expanded by around 2 per cent YoY and stood at 37 per cent for the quarter.

Shares of Airtel closed at ₹313.60 on the BSE on Friday, up 0.85 per cent from the previous close.

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Published on February 08, 2019
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