Safaricom Wins after CAK Approves Airtel-Telkom Merger

Safaricom has made a killing from the conditional approval of the proposed Telkom-Airtel merger by the Communication Authority of Kenya. This follows approval by the regulator carried in its conditions akin to Safaricom’s own expectations to the approval process. To some experts Safaricom has had the last laugh.

The key maxim to Communication Authority of Kenya authorization is the barring of the soon to be merged entityAirtel-Telkom from entering any other sale transactions in the next five years but for the provision of a potentially distressed peer operator under the Communication Authority of Kenya guide book. This condition blocks the pair from making any further market consolidation efforts to largely see Safaricom retain its market leader position.

Moreover to the conditions set by Communication Authority of Kenya which is the regulator is the reversion if Telkom’s 900 megahertz (MHZ) and 1800 MHz back to the government upon expiry of license term.  The pair is expected to also hot all its existing contractual terms with government entities even as the Communication Authority of Kenya expects the pair to Miss’s out any preferential treatment in their access of shared telecommunications infrastructure. At the same time, the pair is expected to retain at least 349 staff from the current pool of 674 with Telkom being orders to keep a minimum of 114 members of its staff.

The set conditions by Communications Authority of Kenya coincidentally align to Safaricom’s own demand as spelled out in its letter to Communication Authority of Kenya earlier this year. On September 4, Safaricom cleared up its demand on the pair to include the immediate clearance of a net total Ksh 1.3 billion for the provision of various services which accrue back, distinctively to the two operators.

Safaricom remains largely embroiled in battle with Telkom and Airtel who are there closest competitors with a greater market share seemingly sitting at the center of the face off. Latest data from Communication Authority Of Kenya as of June 2019 for instance vividly shows Safaricom’s market share at 63.5% or an equivalent 31.8 million customers to mirror a drop in subscription share from 65.4% in a similar review period last year.5 years ago, Safaricom held an even larger share of 68% but has seen this scope narrow as Airtel-Telkom gains to 32.7% or an equivalent 17.4 million customers as at end of June 2019.

The battle between the operators is expected to feature widely ahead of the conclusion of the deal. Ironically market leader Safaricom has its root as an understudy. The government owns a notable share of 35 or 40% in Safaricom and Telkom respectively.