Airtel Africa has called off the planned merger of its Kenyan unit with partly state-owned Telkom Kenya, citing prolonged regulatory delays.
Back in February 2019, Airtel Africa’s Kenyan arm, Airtel Networks Kenya and Telkom Kenya had inked a pact to merge their operations that would enable the Sunil Mittal-led telco to effectively take on Safaricom, the telecom market leader in the east African nation. Completion of the merger transaction though was subject to satisfaction of various conditions precedent, including regulatory approvals.
“Despite Airtel Africa plc and Telkom Kenya’s respective endeavours to reach a successful closure, the transaction has gone through a very lengthy process, which has led the parties to reconsider their stance,” Airtel Africa said in a London Stock Exchange filing Wednesday. It added that both parties have, accordingly, decided to “no longer pursue completion of the transaction”.
Bharti Airtel shares had closed nearly 2% higher at Rs 558.85 on BSE.
According to a Reuters news report, Telkom Kenya, in a statement, said it had “opted to adopt an alternative strategic direction” and would no longer be pursuing the proposed joint venture transaction.
Among other hurdles that reportedly came in the way of the planned merger was fierce employee opposition to a move to lay off some workers in July 2019.
Airtel Africa CEO Raghunath Mandava though said “Kenya is a large and growing market” and the company remained committed to build a growing profitable business. He added that Airtel has over 14 million customers in Kenya, and in the last quarter, revenue numbers were up (by) double-digits in constant currency in the East African country.
A year back, the Airtel Kenya-Telkom planned merger had got stalled after the east African nation’s anti-corruption commission had reportedly suspended the deal amid an ongoing probe into allegations of misappropriation of public funds at Telkom. The deal had then stalled as Kenya’s Ethics & Anti-Corruption Commission (EACC) was reportedly investigating into allegations of misappropriation, recapitalisation and restructuring of balance sheets of Telkom Kenya.
Telkom Kenya, on its part, is 60% owned by UK private equity firm Helios Investment Partners, while the balance 40% is owned by the Kenyan government.