Airtel – Telkom Kenya Merger Stalls upon Graft allegations

Kenyans telco industry regulator – the Communications Authority (CA) has suspended the ongoing merger between the second and third largest telco operators upon graft allegations currently being investigated by the Ethics and Anti-Corruption Commission (EACC).

Preceding to the merger talks, Telkom Kenya and the treasury were being investigated how the government sold part of its stake to French firm Orange. Orange which formed part of the GSM division at the Orange-Telkom was later sold to UK firm Helios Investment, which currently holds 60 percent stake while the Government of Kenya holds 40 percent.

In a separate development, several analysts had raised concerns on how the Telkom Kenya and Airtel Kenya deal was brokered prompting the anti-corruption commission to investigate. Telkom Kenya had sort the Authority’s thumbs up to merge its mobile, enterprise and carrier services with Airtel forming a single joint venture company to be named Airtel-Telkom.

But after the recent allegations, the communications Authority had informed the two mobile telecommunications technology companies that it would not grant them approval until the conclusion of investigations by the Ethics and Anti-Corruption Commission (EACC).

Speaking on the development, the CA director in charge of communications and public affairs, Christopher Wambua said the body had advised both parties that approval shall only proceed upon completion of current investigations by EACC and fulfillment of all the conditions set out by the authority. Wambua also confirmed receiving a letter from the EACC requesting for the merger to be suspended.

Telkom Kenya had put on sale properties across the country accumulating to KSh3.87 billion to raise cash for the merger. Before Safaricom, Telkom Kenya was the telco operator in the country and as so, it has a massive amount of properties across Kenya and just recently sold 723 masts for a whooping Sh17.16 billion to American Tower Company (ATC).

Ever since the state relinquished its grip on the firm, there has been scanty details on exactly who owns Telkom Kenya and now the anti-graft body is seeking more information on the same. In a letter to the Communications Authority, Mr Mbarak from EACC is seeking for more detailing with all original documents on Telkom Kenya’s shareholding and terms of the ongoing merger with Airtel Kenya.

EACC is looking for original documents including all the licenses Telkom had been issued and a letter granting the government permission to cede shareholding in the initial entry of France Telecom.

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