Companies

Airtel, Telkom merger talks cut internet use

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Telkom CEO Mugo Kibati when he appeared before the Senate Committee on Information last October over the merger. PHOTO | DIANA NGILA

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Summary

  • Communications Authority of Kenya (CA) in its latest industry report says that there were 38.85 million internet subscribers as at March down from 46.46 million in similar period last year.
  • The regulator attributed the decline to proposed merger between the telcos with Telkom Kenya’s share of the mobile data market in the year to March shrinking 1.8 percentage points to 5 percent as its internet subscribers shifted amid the uncertainties.

Mobile internet subscribers in the year to March fell 16.38 percent on market uncertainties occasioned by the proposed merger between Telkom Kenya and Airtel.

Communications Authority of Kenya (CA) in its latest industry report says that there were 38.85 million internet subscribers as at March down from 46.46 million in similar period last year.

The regulator attributed the decline to proposed merger between the telcos with Telkom Kenya’s share of the mobile data market in the year to March shrinking 1.8 percentage points to 5 percent as its internet subscribers shifted amid the uncertainties.

Telkom Kenya also scaled its investments in the mobile data market in preparation for a unified business approach with Airtel Kenya.

The merger deal collapsed last month with Airtel Kenya and Telkom Kenya citing unacceptable conditions placed on the proposed amalgamation besides delays in receiving regulatory approvals.

The companies had entered into an agreement on February 8, 2019 to combine their mobile, enterprise and wholesale divisions, a proposed deal that led to uncertainties on the fate of Telkom Kenya subscribers.

“Total data/Internet subscriptions dropped by 0.7 percent during the review period to stand at 39.3 million… This is mainly attributed to the decline in the number of mobile data subscriptions posted by Telkom Kenya Limited during the period under review,” CA says.

In the period under review, Safaricom cemented its dominance in the mobile data market to 68.8 percent from 65.3 percent further pulling away from the two telcos.

Airtel’s share of the mobile market in the period under review fell 1.1 percentage points to 25.8 percent backing the calls for its merger with Telkom Kenya in efforts to cut Safaricom’s dominance.

The two telcos had hopes that approval of the merger deal would create a single entity with financial muscle to invest more in telcommunications industry and reduce Safaricom’s dominance in the data and telephony sub-sectors.

Telkom disclosed that it would now revamp its data business in efforts to grow its revenues after the collapse of the merger deal.

The telco added that it would enter the lucrative fibre internet to homes and offices banking on the Covid-19 interruptions that have ramped up the use of internet as most people opt to work from home.

Safaricom is the second biggest player in the fibre internet market after the Mwananchi-owned Zuku. The telco has been increasing investments in the fixed internet market in efforts to take over the sector that is largely un-tapped.