Why Airtel Telkom Merger Will Not Happen Tomorrow

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Airtel Telcom merger is set to be a wrap come tomorrow 27th September. But as it stands at the moment the transaction may not come to fruition as the Ethics and Anti Corruption Commission (EACC) is still looking into the details matter.

The merger was to breathe some life into two companies by increasing their subscriber base, reducing their average operating costs and increasing their economies of scale and with time increase the competitive edge of the merged entity.

Last month, EACC instructed the communications regulator and the Competition Authority to suspend their approval of the merger to allow investigators to review a 2012 restructuring that whittled down the government’s stake in Telkom Kenya. The investigations are still ongoing since EACC instructed regulators to suspend the merger pending the conclusion of investigations into how the transaction was conceptualized, and how the Treasury gave up further ownership of Telkom Kenya to Orange, the French multinational which later sold its stake to a private equity fund.

Negotiators have revealed that if the deadline is missed, Airtel could possibly to walk away from the deal, weakening the two operators’ chances of beating Safaricom’s dominance of the market,  making it almost impossible for them to leverage their respective strengths in the merged entity on the other.

“There is no chance it the merger will happen by Friday and there is no guarantee that Airtel will agree to a new signing date especially with the uncertainty of the ongoing investigations. A board meeting has been called next week where the issue of the merger will be discussed with a view of negotiating new timelines with Airtel,” a source said.

EACC main robe into the matter was informed by Treasury’s 40 percent stake in Telkom Kenya, which was initially a fully State-owned corporation, while the private Equity fund controls 60 percent of the stake. Telko survival for the last ten years has been on asset sales, and with Airtel keen to grow its revenues through the economies of scale the to be merger suppose it is approved will be a big shot.

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