Telkom Kenya integrates operations with Airtel Kenya as it envisages total acquisition

As part of its plans to acquire Airtel Kenya, Telkom Kenya moves to merge operations with Bharti Airtel’s local units, signifying its first step in acquiring all of the telecom operator’s assets in the East African country.

An unnamed source at office of the Communications Authority of Kenya (CAK) told Reuters on Tuesday that Telkom Kenya plans to take over all of Airtel Kenya, though “they are yet to make a formal application to the regulator, disclosing all the details,” because Telkom Kenya is yet to decide on a structure.

Though Telkom Kenya declined to comment and Airtel Kenya had no immediate comment, this development is the latest report indicating that the Indian firm is reviewing its Africa strategy, considering overhauls and exits of its businesses in East Africa.

Prior to this development, reports making rounds is that Bharti Airtel plans to exit Kenya, Tanzania and Rwanda as a result of low performances in these African markets. Airtel rubbished the reports, saying it has no plans to exit its operations from these African countries, though it confirmed it is open to a merger or acquisition to rescue its non-profitable businesses in Africa.

“We had stated that we are open to consolidation opportunities either through acquisitions or mergers, to create a viable business in these three (Kenya, Rwanda and Tanzania) markets. It was never said that we were looking at exiting these markets,” Airtel Africa said in a statement.

Goldman Sachs, an investment banking company, said that Kenya, Rwanda and Tanzania have margins that are significantly lower than the current average of Airtel’s Africa business. In 2017, Airtel had a bumpy ride in Kenya with reports stating that the company had an outstanding Ksh.45 billion debt.

Analysts, however, are of the opinion that the prospect of Bharti Airtel exiting Kenya, Rwanda and Tanzania and also monetizing more tower assets in five non-profitable markets would help it reduce leverage and boost margins in Africa.

Bharti Airtel has an 18.1% market share in Kenya (6.3 million subscribers), 26% market share in Tanzania that translates to about 1.7 million subscribers and 1.596 million users in Rwanda which is 15% of the market.