Telkom Kenya is reportedly interested in taking over Airtel Kenya’s operations, and is considering merging some of its operations with the Indian firm’s Kenya units as a preliminary step towards this.
While the operator has made no formal application to Airtel, a Communications Authority of Kenya (CA) source has confirmed that the companies are in talks, and that it is due to be formally briefed on the process. Operating as a combined entity would afford both companies a short-term boost in the face of increasing losses.
Telkom Kenya has not proposed a formal structure for a takeover and details are currently unclear, but it is likely that Airtel Kenya would be taken over fully as it is incurring larger losses. Combining their businesses would allow the operators to compete more effectively against market leader Safaricom.
The CA source noted that “under the venture, they will combine their assets, cut down on variable costs such as staff, distribution channels and marketing channels, among others.” Telkom Kenya has 1,581 base stations while Airtel has 1,548, so their combined total would bring them nearer to Safaricom’s total of 4,000.
Speculation is rife that Airtel could exit Kenya, despite the company’s chairman denying reports of a withdrawal in December last year. The company is struggling to turn a profit in Kenya, along with other African markets such as Rwanda and Tanzania. The group is mulling an IPO in the region.
Telkom Kenya’s market share is 8.4%, behind Airtel’s 14.9%. Their combined businesses would have 9.5 million subscribers – still significantly tailing Safaricom, which has 29.4 million subscribers for a 71.9% market share.