Viewpoint: Why Airtel, Telkom marriage rests on thin foundation

Tuesday, February 12, 2019

By Frankline Sunday and Macharia Kamau

The confirmation of the union of Airtel Kenya and Telkom may have excited the market on Friday but a closer look reveals the future might not be so rosy for the two firms, their consumers and to an extent the industry.

The last time a deal of this magnitude was struck in the country’s telecommunications sector was in 2014 when Safaricom and Airtel agreed to snap up Essar Telecom.

Valued at $100 million (Sh10.3 billion at current exchange rates), the deal saw Airtel acquiring the 2.7 million yuMobile subscribers at a cost of $6.9 million (Sh710 million) while Safaricom took up the frequency and phone masts.

In less than two years Airtel had lost virtually all the yuMobile subscribers it had gained, leaving it worse off than it was before the acquisition, in addition to a Sh2 billion legal dispute with the Communications Authority of Kenya (CA) that was only settled last year in the telco’s favour.

Photo courtesy of Scott Mainwaring.

Source: The Standard Digital (link opens in a new window)

Finance, Telecommunications