Telkom Kenya and Airtel are reported to have began started talks that could result into a major merger or a business joint venture in Kenya in a bid to form a telco giant to bite into the market share of leading Safaricom.
First reported by Sunday Standard the two companies could want to combine their operations and function as one entity instead of waiting to be wiped out by the mountains of losses they have been accumulating. It is also said by the same sources that the Communications Authority of Kenya (CA) has been informed of the impending talks and will be briefed once the deal is sealed.
“Shareholders have been talking and they seem to have agreed on most issues on the deal. But you cannot quote me because it is not yet time to speak. In the next two weeks or so, we will be ready to talk about it,” one source said.
Although the exact details of the merger seem scanty, the new deal could see Telkom Kenya take over Airtel, the Indian owned telco, which is the most loss making of the two, seeing that nearly all its strategies have failed to lift it from the loss making territory.
Another source in the mobile industry, also in a position to know, said the deal is as well as done and it is only a matter of time. “It is a done deal. They were to announce it this week or next week. They are doing a joint venture which is technically a merger but on a lower scale,” the source said.
Currently, Telkom Kenya has built or owns 1,581 base stations, some of which are leased, Airtel on the other hand has 1,548. Combined, they would be very close to Safaricom which has 4,000 base stations. With increased base stations, Airtel and Telkom can increase their coverage to underserved regions and enjoy economies of scale.
Telcom also recently launched its ow 4G offering and thus could take advantage of the new added base stations resulting from the merger to bring serious competition to Safaricom which enjoys a larger customer retention base.
It is not known if the merger talks will go through or collapse like the recent NakuMatt-Tuskys merger talks. BrandedIQ will be on top of the news to report any resulting decisions from the merger talks.