The planned merger of Bharti Airtel’s Kenyan unit with the partly state-owned Telkom Kenya has got stalled with the east African nation’s anti-corruption commission suspending the deal amid an ongoing probe into allegations of misappropriation of public funds at Telkom.
Back in February, Bharti Airtel had said its unit Airtel Networks Kenya and Telkom Kenya had inked a pact to merge operations that would enable the Sunil Mittal-led telco to effectively combat Safaricom, the telecom market leader in the East African country.
But global newswires reported Wednesday that the planned merger had been put on hold as Kenya’s Ethics & Anti-Corruption Commission (EACC) is reportedly “investigating into allegations of misappropriation, recapitalisation and restructuring of balance sheets of Telkom Kenya”.
“Telkom has received a request for information from the Ethics and Anti-Corruption Commission (EACC), with regard to allegations made in 2014, and (it) has given the EACC all the information that the commission has requested and continues to cooperate with them on the matter,” a company spokesman said in a written response to ET’s queries.
At press time, ET’s queries to Airtel went unanswered.
News of the stalled Airtel-Kenya-Telkom merger broke on a day the overall customer base of Airtel Africa Plc – with operations across 14 countries – crossed the 100 million-mark.
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.
An insider familiar with the matter said the ongoing EACC investigation has “no connection with Airtel-Telkom Kenya merger process per se”.
A Reuters news report quoted Telkom Kenya’s chief executive Mugo Kibati, saying “the company would cooperate with the investigation, and that the probe “is not linked” to the planned merger deal with Airtel Networks Kenya.
Bharti Airtel shares closed 0.6% lower on BSE at Rs 345.85 on Wednesday. Airtel Africa Plc shares were trading 0.23% higher at 66.85 pence on London Stock Exchange in early afternoon trade.
Experts said the merger is crucial for both Airtel and Telkom to jointly take on Safaricom, which commands a 62.4% market share in the Kenyan telecom turf. Airtel Networks Kenya and Telkom control around 26.1% and 8% respectively.
Earlier this year, Airtel Kenya had said that post-merger with Telkom, the two companies would merge their mobile, enterprise and carrier services businesses in the East African country, subject to approvals, and operate as Airtel-Telkom.
Source: Economic Times