Airtel Networks Kenya Ltd, a subsidiary of Bharti Airtel’s Africa unit, has called off the merger with Telkom Kenya Ltd citing challenges to secure regulatory approvals for the deal, Airtel Africa Plc notified the London Stock Exchange, where the telco was listed last year.
“The transaction has gone through a very lengthy process, which has led the parties to reconsider their stance. Accordingly, Airtel Africa and Telkom have decided to no longer pursue completion of the transaction,” Airtel Africa said in a regulatory filing on Wednesday.
Bharti Airtel Ltd in February 2019 had said its Kenya unit agreed to acquire Telkom Kenya, the East African nation’s smallest telecom operator, in which the state still has a 40% shareholding, after a majority stake was sold in 2007.
The deal, whose terms have never been disclosed, would have created Kenya’s largest telco, beating Safaricom, which controls more than 60% of Kenya’s mobile subscriptions market.
“We currently serve more than 14 million Kenyan customers, a number that is growing month on month, and in the last quarter our revenue numbers were up double digit in constant currency in Kenya,” said Raghunath Mandava, chief executive officer and managing director (MD & CEO) of Airtel Africa, in the statement.
Airtel’s east African operations, which include Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda, saw revenue rising to $306 million in the June quarter in constant currency terms, from $261 a year ago and $299 in the preceding quarter.
“Telkom has opted to adopt an alternative strategic direction and will no longer be pursuing the proposed joint venture transaction,” a Reuters report quoted Telkom Kenya as saying. The Kenyan telco added that the decision had been agreed with Airtel Kenya.
Besides the challenges of securing the required approvals for the deal which were not elaborated, Telkom Kenya also cited opportunities presented by growing demand for internet services on the back of the coronavirus crisis, which has forced many to work and learn from home, the Reuters report said.
The proposed merger has faced several regulatory hurdles and drawn flak for being improper since its announcement. Nearly a year earlier, Kenya’s anti-corruption commission had suspended the deal amid an ongoing probe into allegations of misappropriation of public funds at Telkom.
Kenya’s Ethics and Anti-Corruption Commission had withheld the transaction, causing the merger to miss its expected completion deadline of September 2019. Live Mint