Safaricom asks CA to ensure Airtel, Telkom clears debt before merger

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Safaricom has written to the Communication Authority of Kenya (CA) seeking the body’s intervention to ensure that rival network service providers Telkom and Airtel pay back Ksh. 1.2 billion debt to the telco ahead of the two firms’ planned merger.

According to Safaricom interim Chief Executive Officer (CEO) Michael Joseph, Telkom and Airtel Kenya owe the telco Ksh. 906.6 million and Ksh. 390.7 arrears respectively after the two firms outsourced interconnection, co-location and fibre services from the telco. Mr. Joseph continued on to say that since Airtel declared that it will not take up Telkom’s liabilities once the merger is successful, tracking the Ksh. 1.2 billion debt will prove problematic moving forward.

“We request the Authority’s intervention in ensuring that all the outstanding debts owed to us in relation to the said services are paid in full as a prerequisite for the approval of this transaction,” Mr. Joseph in the letter addressed to the CA.

According to the Business Daily, Safaricom similarly expressed concern on the spectrum that the merged entity will hold once the merger is complete. According to the firm, the merged entity between Airtel and Telkom will hold a bandwidth of 77.5 percent against Safaricom’s 57.5 percent spectrum which will affect competition in the sector. The imbalance, according to Safaricom, should be addressed before the merger is commissioned by the CA.

On his part, Telkom Kenya Managing Director Mugo Kibati hinted that Safaricom’s move was put into action to likely delay the merger with Airtel.

“Is the dominant player wary of competition, and even more precisely, wary of competitive pricing?” Mr Kibati posed the question according to the Business Daily news report. If approved by the CA, the planned merger between Telkom and Airtel will culminate in the establishment of a single joint venture operating under the name Airtel-Telkom. The merger, which will combine the assets of the two telcos, is seen as a way to counter Safaricom’s dominance of the local network service provision industry.

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